The difference between $.15 per KWH for wind and $.45 per KWH for diesel is so extraordinary (a whopping 200%) it can not be explained away, by either AVEC or Native Energy, as needing additional revenue to be cost-effective.

The O&M argument does not holdup. O&M for wind is typically just 1% of project cost. Let's double or quadruple that to 4% for Alaska and you're still looking at just $.006 per KWH (or $.156 KWH vs $.45).

The idea that the last 2-4% of the project was not covered while the consumer is saving 66% somehow made the project additional is an incredible argument.

So what are Native Energy's customers paying for, where is the $12 per ton of carbon offset going, how many carbon credits did they buy and how much did they put into the two year O&M kitty in return for those carbon credits?

Consumers goodwill should be financing projects that need it, that are on the edge of viability, not projects that are already cost-effective. This is how we move markets.

Part of that 45 cents is stuff like billing and administration that has to be allocated to all forms. The 15 cents is generation cost. The 45 cents is total cost. Still, essentially you are right. The gap is huge.

Fuel cost alone for diesel (purchase, delivery and storage) ranges from 13-25 cents per kWh. The mid point of that is 19 cents. But diesel is notoriously expensive as a primary way to generate electricity even when fuel is cheap. The problem is that a diesel engine run over a long period of time and variable speeds either has to be replaced frequently or requires really extensive maintenance often both. In addition, in Alaska, Diesels have to be climate controlled cause diesel engines don't work well in extremely cold weather.  I would think generation with small diesel engines would add at least a nickel per kWh to generation costs, maybe more. I know that there are cases where unsubidized photovoltaic cells beat diesel on cost in remote areas, back when oil was $15 per barrel.  So 24 cents a kWh for generating costs (fuel, fuel transport and storage+ power plant cost, maintenance and O&M) is a low estimate. I would think realistically somewhere between 24-30 cents per kWh.  As a check the average figure in the  power industry in the U.S. is that generations runs about 60% of cost which would be about 27 cents per kWh. Part of remainder is stuff like administration and billing. Another large hunk is  distribution lines. Even though there is no long distance transmission, there is distribution of a hundred or so buildings, and some of the power plants may be far enough from the main part of the village they serve to require a short transmission line as well.  With no economies of scale available, maintaining these tiny distribution networks has to be fairly expensive.

However, event taking the low figure, the difference between 24 cents per kWh and 15 cents per kWh could still cover an awful lot of O&M.

I love that the banner ad at the top of this story was for GE's Ecomagination.  

It reminds me think that the author is shooting at the guys in the white hats...

It is an impossible argument, no matter how you dress it up, to suggest a project that reduces the price per KWH from $.45 to $.15 was not somehow cost-effective.

For everything that is undefinable about 'additionality', this project is straight forward, the economics overwhelmingly work and the offset dollars make no difference.

But the key question for any consumer is: where did my money go?

Regardless of Stoddard's explanation, the key question remains. We know the project needed no money to be cost effective. But even if it did need a small O&M fund above the normal O&M fund, this could not have been more than a couple thousand dollars (Native Energy, why don't you tell us?). So where did my money go?

Native Energy does not enjoy the level of certification other offset companies have, nor the transparancy, so at a minimum Stoddard could tell us how much money went to the project for how many tons of carbon credits?

The incredible part is how Stoddard refuses to back down in the face of the overwhelming evidence.

Perhaps Al Gore feels good knowing his money went to an unneeded O&M fund for a project that was already going to reduce costs by over 50%. I doubt most consumers do.

Again, consumers should ask, where is my money going? How much went to the project and how much to Native Energy's coffers.

Wow! What a business.  How do I get some of these goodies for myself?  Let's see.  First, I get some suckers to contribute lots of money using outrageous pricing - over twice what low cost NGO's charge.  Then, I spend an itty-bitty amount of that money on some projects that were already cost-effective. How much? Who knows?  The best part is that all the rest of the money is MINE.  Additionality, who cares?  I've got mine, Jack.

As a private corporation Native Energy does not even publish any financial information. Does anybody certify their projects?  Can't tell.  Sorry, kayakkid, there is no way to follow the money.  Just pay up and kiss it good bye.

Do you think that Al Gore, Hillary Clinton and Ben & Jerry's really did any homework before signing up with these guys?  Not likely.

My rule: buy credits from low cost NGO's that maximize the impact of my offsets with certified projects and who release good financial information so I can follow the money.

Kayakkid and Pilgrim - your comments might have some merit if they were factually correct.  They are not.  The 15 and 45 are apples and oranges.  The 45 includes total grid and administration operating costs and the 15 does not.  Even Gar Lipow pointed that out.  Your continued reference to the reduction from 45 to 15 is disingenuous at best.

Only AVEC can comment on the significance of the net operating savings.  We are not about to disclose AVEC's financial information.

Our point is that we never relied on financial additionality with this project.  Even the UNFCCC Tool for the Assessment and Demonstration of Additionality makes clear that economic returns do not necessarily make a project non-additional.

Please stay tuned.  AVEC has indicated that they will post a comment shortly after close of business AK time.

While you all trade technical comments of interest to your industry, they are skating on thin ice like a polar bear on summer melt up there in Alaska. Since the consumer has to be educated to avoid getting bamboozled, this makes market credibility vulnerable. Old Native Energy Alaska is backtracking like a Klondiker spooked from his gold mine by a Grizzly. The permafrost is melting right under his feet. Lotta wind on that farm. He can spin a tall turbine or two.

Those who are absolutely transparent will come out the winners. You have to hope that the bad end of the market does not ruin the image of the whole idea of trading among consumers, sort of like jailed Paris Hilton damaging the reputation of all easy, slightly slutty blondes: it wouldn't be fair, and it would be a damn shame.

NOTHING LIKE FREEDOM

With fuel costs of 13-39 cents per kWh, it seems like your fuel costs alone are more than 15 cents per kWh. However, you also have maintenance costs on your diesel engines which are high and have to vary with hours of usage. So wind energy also reduces your amortization and maintenance on Diesel engines. In short I don't think all of that 32 cents is incurred by wind, because you are operating diesel engines, that can be operated somewhat less thanks to wind. (If you could not operate them less you would have no fuel savings. )