When there's a trillion dollars of clean energy free money handouts sloshing around, suitors are lining up from around the globe to get their share.
Small Towns Chase America’s $3 Trillion Climate Gold Rush
The Wall Street Journal reports Small Towns Chase America’s $3 Trillion Climate Gold Rush. That's a free link. Here are some snips.
In December, Colleton snagged a $279 million investment from Kontrolmatik Technologies Energy and Engineering, a Turkish firm that is hoping to get nearly $1 billion in federal tax credits over the next decade by building a battery-making plant in the U.S. Kontrolmatik wants to tap into the renewable-energy sector’s need to store electricity for release onto the grid when the sun isn’t shining or the wind isn’t blowing.
“I’ll be honest, I have no idea what a gigawatt-hour is,” Colleton County Council Chairman Steven D. Murdaugh told local leaders at a February groundbreaking ceremony. “But I do know what a $279 million investment will do for our county, and I know what impact 575 jobs will have on our community.”
The Math
$275 million investment
$1 billion in tax credits
575 jobs created
$1,739,130 in tax credits per job created
Not a Game for Startups
Tens of billions of dollars more have been announced for electric-car batteries, clean hydrogen and carbon capture. The 2021 infrastructure law provides billions on top of that in federal grants and direct spending.
Companies such as chemical-maker Air Products and Chemicals Inc. have said they will invest billions of dollars in plants that produce hydrogen, a potential alternative to fossil fuels for transportation and industrial processes. Auto makers and battery manufacturers are announcing multi-billion-dollar factories to produce the parts needed for an expected surge in electric vehicles.
Energy giants are planning to partake in the subsidy bonanza as well. “This is not a game for startups,” Exxon Mobil Corp. CEO Darren Woods told investors in January.
How Will the Credits Work?
That seems like a good question, but anyone following this administration should know the answer: Biden will make the rules up on the fly.
More investments will come after the Treasury Department clarifies the fine print of how the tax credits will work. SolarEdge Technologies Inc., which makes equipment that converts energy from the sun into electricity, will invest between $125 million and $250 million in its first factory in the U.S., depending on how Treasury characterizes its devices, chief financial officer Ronen Faier said. The company previously built plants in cheaper countries such as China, Mexico and Vietnam.
Startup Wild Gambles
“We’ve got a battery company that’s never made a battery. I don’t know how you can call that anything other than a wild gamble,” West Virginia Republican State Sen. Robert Karnes said at a February legislature meeting.
Hello Istanbul, Turkey
At an address in January, he thanked Bahadir Yetki, the chief executive of Kontrolmatik’s U.S. unit, and representatives from BMW AG, battery-recycling company Redwood Materials Inc. and electric-vehicle battery maker Envision AESC Group Ltd. The companies had pledged to invest about $6 billion in the state in recent months and stand to benefit from the new federal tax credits.
Kontrolmatik, which is listed on the Istanbul Stock Exchange, was founded in 2008 as an engineering firm but has branched into software and electrical equipment for power projects. The company plans to open its first battery-making factory in Turkey in the next few months.
After the passage of the Inflation Reduction Act, Kontrolmatik decided to build its second battery plant in the U.S.
Wind Turbines Only Profitable With Subsidies
In 2007, state and local leaders offered millions of dollars in loans and tax credits to attract TPI Composites Inc., a wind-turbine blade maker, to Newton, Iowa, to make up for the closure of a big Maytag appliances plant. The next year they offered more than a million dollars to a manufacturer of wind towers that was the predecessor of Texas-based Arcosa Inc.
But by 2021, TPI’s Newton plant was struggling from the high costs of U.S. manufacturing and the looming expiration of a federal tax-credit program. That December, TPI closed the plant. Meanwhile, the expiring tax credits also hit Arcosa’s sales, and the Iowa factory laid off more than 80 workers.
At TPI, CEO Bill Siwek said his company could get tax credits totaling around $80,000 per blade—enough to wipe out the labor cost differential with other countries “and then some.” He hopes that he can rehire many of the plant’s roughly 1,000 former workers, although he said it’s still unclear what will happen when federal subsidies go away in around 10 years.
Uncertain Wind Turbine Blade Math
$80,000 per blade in subsidies
1,000 employees
Missing info on how many blades the company can make
What happens after subsidies expire in 10 years
Modern Wind Turbine Blades
Please consider How Much Does One Wind Turbine Blade Cost?
A typical wind turbine blade can cost around $154,000 (NREL) but this includes the costs of materials, the wind turbine manufacturers' labor costs, and maintenance.
The initial purchase cost is around half of this total, at $73,600.
For larger wind turbines, which require longer blades, the blade cost can increase to as much as $500,000.
Wiley estimates that there are around 3800 wind turbine blade failures each year, which accounts for around 0.54% of all blades in existence.
Alternate Wind Turbine Blade Math
The initial purchase cost of a wind turbine blade is $73,600.
At TPI, CEO Bill Siwek said his company could get tax credits totaling around $80,000 per blade—enough to wipe out the labor cost differential with other countries “and then some.”
I wonder what happens to the price of the raw materials that make up wind turbines when we start sloshing hundreds of billions of dollars ins subsidies around.
Materials Needed
AZO asks and answers What Materials are Used to Make Wind Turbines?
Much of the turbine drivetrain is produced from various alloy steels and cast irons, the generator, however, can contain a more diverse range of materials depending on the type. The most common of which is the doubly-fed induction generator (DFIG), containing predominantly magnetic steel and copper.
However, the most popular generator type with new turbines and particularly those offshore is the permanent magnet generator (PMG). PMGs are smaller, lighter, more efficient, and more reliable than equivalent DFIGs, but come with a higher capital cost. Part of this cost is due to the presence of rare earth elements alongside the magnetic steel and copper, including neodymium (Nd), praseodymium (Pr), dysprosium (Dy), and terbium (Tb)
Billion Dollar Loans for Hydrogen
With wind turbines out of the way let's take a look at hydrogen.
In Lincoln, Neb., hydrogen startup Monolith was eyeing about 40 sites around the world for its future plants but is now only considering domestic locations while it builds its first big facility in the cornfields of nearby Hallam.
Monolith is developing a new process that uses natural gas to produce hydrogen—a key ingredient in fertilizer—then captures the associated carbon emissions and turns them into a material that can be used in products such as tires. Founded over a decade ago, the company expects to receive a $1 billion loan from the Energy Department.
Sheila Taylor, a member of the Village of Hallam board, said locals mostly support the Monolith project after the company addressed their worries about the plant’s high water consumption and possible noise. She can see the plant from her house.
Water Concerns, Noise Concerns, Startup Concerns
Well, that's OK because history suggests nothing will ever go wrong with government-sponsored billion-dollar loans to startups.
By the way, how many jobs will this billion dollar loan create? The article didn't say but I found the answer from Monolith.
"Once completed, the facility will generate around 260 direct and 600 indirect, high-paying, highly skilled, green energy jobs to support its operations."
$1 billion divided by 860 is $1.16 million per job. But that's a loan. If the loan is paid back the cost seems small.
But what about the subsidies needed to pay back this loan? No one says. And all taxpayers get out of this is 860 jobs.
Hoot of the Day
Let's return to a quote by West Virginia Republican State Sen. Robert Karnes for the hoot of the day:
“We’ve got a battery company that’s never made a battery. I don’t know how you can call that anything other than a wild gamble.”
Biden Struggles to Convince People to Buy EVs, Only 12 Percent Seriously Considering
Meanwhile, please note Biden Struggles to Convince People to Buy EVs, Only 12 Percent Seriously Considering
Also consider Pulling CO2 From the Air, a Giant Sucking Sound of Environmental Madness
Thanks to government subsidies, Occidental is making a billion dollar bet on using tennis court sized fans to suck carbon dioxide from the air.
Amazingly, the name of the bill that authorized these boondoggles is the Inflation Reduction Act.
https://www.zerohedge.com/political/bidens-trillion-dollar-clean-energy-grab-bag-pictures-and-quotes
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