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Wind power: look at costs of “boom”

There’s been a lot of investment in Nolan County, Texas. Things are booming.

That’s pretty much the entire point of an op-ed piece in the Wichita Eagle by Scott Allegrucci. (Money Blowing in the Wind in Texas, January 16, 2009)

He’s the director of the Great Plains Alliance for Clean Energy, based in Topeka. This organization’s website states that “GPACE seeks to correct an imbalance in the information citizens and their elected representatives have received regarding the critical and complex energy policy decisions facing our state.”

If that’s really GPACE’s goal, Mr. Allegrucci didn’t advance it in this piece. That’s because he promotes the benefits of spending on wind energy without considering the true cost of wind energy. Further, he ignores the tremendous subsidy poured into wind energy production.

Last year the Texas Public Policy Foundation released a report titled Texas Wind Energy: Past, Present, and Future. This report contains information about the realities of wind power. It provides the balance that GPACE says it seeks to provide but fails to deliver in Mr. Allegrucci’s op-ed.

For example, did you know that every bit of wind power that’s produced receives a subsidy? Last year, as the subsidy was about to expire, wind power advocates warned that without the subsidy, wind power production would cease. No new plants would be built. It’s these subsidies that have created the growth in Nolan County that Allegrucci writes about. These subsidies produce some peculiar incentives. From page 25 of TPPF’s report:

The financial handouts available to wind developers are so generous that, in Texas, many wind-energy producers “will offer wind power at no cost or even pay to have their electricity moved on the grid, a response commonly referred to as ‘negative pricing.’ Wind providers have an incentive to sell power even at negative prices because they still receive the federal production tax (PTC) credit and renewable energy credits.”

Directing subsidies of any type into a concentrated area produces the results described by Allegrucci in this county. There’s nothing remarkable about that. But what about the rest of Texas? From the executive summary of the TPPF report:

The distinction between wind and wind energy is critical. The wind itself is free, but wind energy is anything but. Cost estimates for wind-energy generation typically include only turbine construction and maintenance. Left out are many of wind energy’s costs — transmission, grid connection and management, and backup generation — that ultimately will be borne by Texas’ electric ratepayers. Direct subsidies, tax breaks, and increased production and ancillary costs associated with wind energy could cost Texas more than $4 billion per year and at least $60 billion through 2025.

It’s a common error, assuming that since no one owns the wind, wind power is free once the turbines are built. That’s far from the case, though. Page 23 tells us this:

The true cost of electricity from wind is much higher than wind advocates admit. Wind energy advocates ignore key elements of the true cost of electricity from wind, including: (i) The cost of tax breaks and subsidies which shift tax burden and costs from “wind farm” owners to ordinary taxpayers and electricity customers. (ii) The cost of providing backup power to balance the intermittent and volatile output from wind turbines. (iii) The full, true cost of transmitting electricity from “wind farms” to electricity customers and the extra burden on grid management.

The reality is that the boom in Nolan County is being paid for by electricity customers throughout Texas. Not by their choice, too.

When considering wind power, balance requires us to consider these factors. The illustration that a concentrated area experiences a boom from a subsidized, expensive, and unreliable source of power doesn’t paint a picture of sound public policy.

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2 Comments

  1. JSM January 20, 2009

    Subsidies. Before you go on about subsidies for wind. Let’s talk about subsidies for Coal, Gas, Oil, and Nuclear. All thermal and non renewable. For every $1 wind power recieves in State (Texas) and local subsidies thermal energy (Coal, Oil/Gas, and Nuclear) get $95.
    Yeah, 95 to 1. So is the energy market are free market?

    Tranmission, the cost of transmission is repaid in less than a year. What? Ok fuel saving for displacing the fuel you would have used is estimated at $1.68 Billion and Customer savings are estimated at $3.4B. So, building transmission infrastructure saves all consumers money.

    Now, backing up wind. This is really silly. The technology not designed to a base load generator (main source of power) it is a supplemental and a fuel saver. Wind is very predictable, unlike thermal power. The must be enough reserve back to cover the failure of two thermal power plants. Why two power plants? Because thermal power plant can crash in 1/60 of a second.

    Finally the true cost of wind? Wind doesn’t pollute. Coal and other thermal pollute. What is the true cost of increase pollution? Increase medical cost to the population, fish and wild life deaths. Vast of about of water used and polluted by thermal producers. And the risk of catastrophic accidents like the toxic coal ash spill.

    BUILD MORE WIND POWER, 20% of your states energy needs to come from wind

  2. Wind Power Australia July 29, 2009

    Nice post. Looks like wind power is really starting to get some serious consideration in Australia now.

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