Fierce Winter Forces Maryland Renewable Energy Company into Bankruptcy
Maryland renewable power provider Clean Currents announced it is going into bankruptcy, adding another chapter to a long line of renewable energy company failures. Company officials publicly blamed the cold winter for forcing it out of business.
Spot Markets Led to Doom
Clean Currents attracted customers looking to support renewable power at reasonable prices. Rather than generate its own wind and solar power, which is intermittent and unreliable, Clean Currents purchased power on the spot market—most of it produced from conventional coal, natural gas, and nuclear power producers)—and additionally purchased offsets from wind and solar power producers. Customers purchased power from reliable sources while simultaneously purchasing the ability to feel good about supporting renewable power.
By relying on the spot market for its power purchases, Clean Currents bet on stable or declining conventional and renewable power prices despite federal environmental officials ramping up expensive environmental restrictions. According to the U.S. Energy Information Administration, however, Maryland electricity prices were 6 percent higher in December 2013 than in December 2012.
When historically cold weather repeatedly hammered the United States in January and February, natural gas prices and spot-market electricity prices rose even higher. Clean Currents could no longer purchase power on the spot market and deliver it to customers at their lower, locked-in prices.
A Rising Star No More
Renewable power supporters had billed Clean Currents as a rising star in the region’s economy. In 2011, the company obtained a $50,000 grant from the Montgomery County Department of Economic Development to expand its operations.
The conditions of the grant required the company to employ at least 29 permanent, full-time employees by Dec. 31, 2014. With the company now going into bankruptcy and unable to fulfill its obligations, the county government is hoping the company will pay back the grant.
Global Warming Irony
Daniel Simmons, director of state policy at the Institute for Energy Research, noted the irony of a renewable energy company promoted as a means of fighting global warming declaring an exceptionally cold winter forced it into bankruptcy.
“The failure of Clean Currents exposes the scam of switching ‘to wind power at your home,’ as the Clean Currents website used to say,” Simmons said. “If Clean Currents really got its electricity from wind, and wind power could be trusted to deliver on-demand electricity, then the company wouldn’t have had a problem.
“In reality, the company was at the mercy of the wholesale electricity market, a necessary risk when relying directly or indirectly on unreliable wind power” Simmonds explained. “So much for switching to wind.”
"The company's failure underscores the futility of subsidies to keep uncompetitive businesses afloat," Simmons added. "Wind power proponents always promise fantastic job creation and economic growth in return for the subsidies, but wind power consistently fails to deliver on those promises."
Bonner R. Cohen, Ph. D., (firstname.lastname@example.org) is a senior fellow at the National Center for Public Policy Research.