Today’s alternative energy watch looks at a new effort to increase domestic use of ethanol and a report from the UK on the efficiency of wind generation.

A bill called the “Biofuels Market Expansion Act of 2011” was introduced in the US Senate in January and got a hearing last week from the Senate Energy Committee. The bill requires that automakers increase the proportion of flexible-fuel vehicles in their fleets to 40% by 2014, 50% by 2015, and 90% by 2016 and thereafter. A flex-fuel vehicle can burn an ethanol blend as high as 85% (E85), as well as lower blends and pure gasoline.

The federal government would provide grants to pay for the installation of blender pumps both at the distributor and at the retailer, provided that the retailer does not own more than 49 retail fueling stations. Major fuel distributors would be required to install pumps for E85 ethanol in 10% of stations by 2014 and 50% of stations by 2020 in all 50 states.

If the bill is adopted, producers such as Archer Daniels Midland (NYSE: ADM) and Pacific Ethanol, Inc. (NASDAQ: PEIX) could be in line for dramatic growth. Producer/marketers like Valero Energy Corp. (NYSE: VLO), which have their own fueling networks, would not fare so well.

The main argument against a new ethanol infrastructure (blending equipment and, especially, pipelines) is that it could inhibit development of algae-based biofuels that are compatible with the existing infrastructure for petroleum-based fuels and that don’t compete for crops that can be used for food.

Food competition aside, there are somewhere between 120,000 and 140,000 gas stations in the US. According to a report from the National Renewable Energy Laboratory, the median cost to add a new tank for ethanol is more than $59,000.  That’s $3.54 billion for 60,000 E85 pumps. The pipelines would cost much more, and the federal government is offering only loans, not grants, for them.

While it’s always risky to predict what the Congress will do, the scheme to make E85 more widely available is very unlikely to get much traction. Automakers are unlikely to support this, as are independent gas station owners. And they’re right, it’s not a good idea.

Another idea that may not look so good is wind power. A study by the John Muir Trust in the UK has analyzed wind generation in that country and found it to be wanting in several areas.  The study examines five common statements about wind energy and replies to each based on data from industry and government sources. Here’s a look at each.

Assertion 1: Wind turbines generate an average of 30% of their nameplate capacity over the course of a year. Data: Average output in 2010 was 21.14%, in 2009, 27.18%, and for a 26-month period from November 2008 through December 2010, 24%.

Assertion 2: Wind is always blowing somewhere. Data: On 124 occasions in the 26-month period less than 20 megawatts were being generated out of a capacity greater than 1,600 megawatts.

Assertion 3: Periods of widespread low wind are infrequent. Data: There is a low-wind event (less than 20 megawatts) every 6.38 days and the low-wind period lasts almost 5 hours.

Assertion 4: The probability of low-wind output coinciding with peak demand is slight. Data: In 2010, at the four highest peak demand periods, wind output was 4.72%, 5.51%, 2.59%, and 2.51% of nameplate capacity.

Assertion 5: Pumped hydro can fill in the gaps for prolonged low-wind periods. Data: UK pumped hydro capacity is about 2,800 megawatts for no more than 5 hours, after which it drops to just over 1,000 megawatts, and then runs out of water after 22 hours.

The report also notes that wind generation was below 20% of capacity more than half the time and below 10% of capacity more than 33% of the time. The report concludes: “It is clear from this analysis that wind cannot be relied upon to provide any significant level of generation at any defined time in the future. There is an urgent need to re-evaluate the implications of reliance on wind for any significant proportion of our energy requirement.”

This report succinctly points out is that relying on average output numbers for wind generation is problematic at best. The report does not say wind generation is worthless, but it does warn that making policy decisions based on false assumptions about wind power is likely to lead to the adoption of the wrong policy. Altogether, this is a fascinating study.

Paul Ausick

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