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SPPIREPRINTSERIES February10,2010
THETRUECOSTOFELECTRICITYFROMWINDISALWAYS
UNDERESTIMATEDANDITSVALUEISALWAYSOVERESTIMATED
byGlennR.Schleede
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TABLEOFCONTENTSINTRODUCTION........................................................................................................................... 3
PERVASIVEMISUNDERSTANDINGOFTHETRUECOSTANDVALUEOFELECTRICITYFROMWIND ................................................................................................................................. 3
IMPROVINGPUBLIC,MEDIAANDPOLITICALLEADERSUNDERSTANDINGOFWINDENERGYCOSTSANDVALUE ..................................................................................................... 4
SIXPOINTSCRITICALTOANACCURATEUNDERSTANDINGOFTHEHIGHTRUECOSTANDLOWVALUEOFELECTRICITYFROMWIND .................................................................. 5
POINT1: Thereisafundamentaldifferencebetweenwindturbinesandreliableelectricgeneratingunits. ....................................................................................................... 6
POINT2: Windturbineshavelittleornocapacityvalue. ................................................... 7
POINT3: Electricityproducedbywindturbinesi.e.,thekilowatthours(kWh)haslessrealvaluethanelectricityproducedbyreliablegeneratingunits.. ....................... 8
Point4: Largepartsofthetruecapitalandoperatingcostsofelectricityfromwindarehiddenbecausemassivefederal,stateandlocaltaxbreaksandsubsidiesshiftmuchofitstruecostfromwindfarmdevelopersandownerstotaxpayers
andelectric
customers. ............................................................................................ 8
Federaltaxbreaksandsubsidies. ........................................................................... 9
Statetaxbreaksandsubsidiesforwindfarmowners.................................... 14
Localgovernmentandeconomicdevelopmentagencytaxbreaksandsubsidies.................................................................................................................. 15
POINT5: Otherimportantelementsofthefull,truecostofelectricityfromwindareoftenhiddenorignoredbywindenergyadvocates....................................................... 16
POINT6: Noonereallyknowsthetruecostperkilowatthour(kWh)ofelectricityfrom
windturbines
because
all
estimates
of
such
costs
are
based
on
highly
questionableassumptionsreallyguessesthatareuntested. ........................ 18
THEPRECEDINGPOINTSAREFOCUSEDONFINANCIALCOSTANDVALUE,NOTEXTERNALITIES.......................................................................................................................... 20
CONCLUSIONS........................................................................................................................... 20
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THETRUECOSTOFELECTRICITYFROMWINDISALWAYSUNDERESTIMATEDANDITSVALUEISALWAYS
OVERESTIMATED
byGlenn
R.
Schleede
|February
4,
2010
INTRODUCTION
Probably the most common wind energy question that I receive from analysts, reporters,and interested citizens deals with the cost of electricity from wind. The frequency of thequestionisunderstandablesinceestimatesprovidedbythewindindustry,federalandstateagencies and contractors,andthemediaunderstate thetruecostand ignorethefact thatelectricityfromwindisverylowinvalue.
Typically, those asking the question would like a simple way to compare the cost ofelectricity from wind with the cost of electricity from other sources. Unfortunately, thatisntpossible. Forthosewhoinsist:
Thefirstshortanswer isthatthetruefinancialcostofelectricityfromwind ishugecomparedtoelectricityfromreliablegeneratingsources.
The second short answer is that the cost of electricity from wind should not becompared with the cost of electricity from reliable generating sources because thevalueofelectricityfromwindismuchlower.
PERVASIVEMISUNDERSTANDINGOFTHETRUECOSTANDVALUEOFELECTRICITYFROMWIND
Infact,fewpeople inthegeneralpublic,mediaorgovernmentknowthefactsaboutthehightruecostandlowtruevalueofelectricityfromwind. Forexample,notlongago,thedelegateto the General Assembly representing our district in Virginia stated repeatedly during atelephonictownhallthatelectricityfromwindisnowcompetitivewithelectricityfromcoal. The delegate has a degree in electrical engineering and a long record ofaccomplishmentsinelectronics. Hisstatementisconsistentwithclaimsoftenmadebywindindustry
lobbyists
but,
unfortunately,
the
statement
is
false.
ThedelegatesfalsestatementisunderstandablesincetheUSDepartmentofEnergy(DOE),DOEs National Laboratories and other contractors (all paid with tax dollars), the windindustry; and other wind energy advocates have, for years, issued false and misleadingclaimsaboutthecostandvalueofelectricityfromwind.
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Criticallyimportantamongtheelementsoftruecostthatareoftenunderstatedorignoredbywindenergyadvocatesisthehugecostoftaxbreaksandsubsidiesprovidedtothewindindustry. Initially,taxbreaksandsubsidiesforwindenergywere justifiedongroundsthatthey were necessary to help an emerging technology compete with existing technologiesfor producing electricity until the technology was more thoroughly developed anddemonstrated.
Federal,stateandlocalgovernmenttaxbreaksandsubsidiesforwindenergyhavebecomesoprevalentthat itsvirtuallycertainthatthepoliticiansandregulatorswhoprovidethemhavenounderstandingoftheirmagnitudeandcost. Itsalsovirtuallycertainthattheyhavenotweighedbenefitsandcosts. Iftheyreallyhavedoneeither,thereisnoquestionbutthattheyhavedecidedtoputthespecialinterestofthewindindustryaheadoftheinterestsoftaxpayersandelectriccustomerswhoarepayingfortheirlargess.
Wind industry lobbyists have been exceedingly effective in winning huge tax breaks andsubsidiesfromgovernments. When initiallyproposed,windenergyadvocatesarguedthat
tax
breaks
and
subsidies
were
necessary
to
permit
a
relatively
new
and
developing
technologytogainafoothold incompetitionwithothersourcesofenergyforproducingelectricity. However,industrydemandsforcontinuation,expansionandextensionofsubsidieshave made it clear that there are no longer any serious expectations that wind energy iscompetitiveorthatimprovementsinthetechnologywilleventuallymakeitcompetitive.
Instead, it appears that the only hope that wind energy would become economicallycompetitive with traditional energy sources is if the cost of electricity from traditionalsourcesweredrivenmuchhigherwithalltheadverse impactsonelectriccustomersandlocalandnationaleconomiesthatresultfromhighelectricityprices.
IMPROVINGPUBLIC,MEDIAANDPOLITICALLEADERSUNDERSTANDINGOFWINDENERGYCOSTSANDVALUE
Thefalseclaimsandthewidespreadmisunderstandingaboutthefull,truecostsandthelowvalueofelectricityfromwinddemonstratethatitistimetofocusonthefacts. Itwouldbenice if this could be done in a brief paper but brief papers have not been effective ingettingthroughtopeople(particularlythoseingovernmentandthemedia)whoshouldbepresenting the public and our political leaders with accurate information. Therefore, itapparently isnecessarytoexplainthebasicswhich,unfortunately,requiresa longpaperthatdelvesintothedetailsaboutthecostandvalueofelectricityfromwind.
Accordingly, this paper provides details on all the key factors that must be taken intoaccountwhenmakinghonestestimatesofthetruecostandvalueofelectricityfromwindenergy. This paper will not provide numbers that can be compared because thedevelopment of valid and reliable cost and value data requires detailed information andassumptionsthatvarywidelyamongwindfarms,thegenerationmixandelectricitysupplyanddemandsituationwithinelectricgridcontrolareas,andotherfactors.
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Hopefully, once the factors that affect true cost and value of electricity from wind areunderstood,analysts, investors,reporters,andothers interested inhonestcomparisonsofcostsandvaluewillbeabletomakerealisticestimatesofatleastthecostsperkilowatt(kWof)windgeneratingcapacity.
But,asexplainedbelow,reliableestimatesofthecostperkilowatthour(kWhof)electricity
produced
by
wind
farms
will
still
not
be
possible
because
such
estimates
are
entirely
dependentonfactorsthatareandwillremainunknown. Assumptions(i.e.,guesses)madeby those who claim they know the cost per kWh of electricity from wind can easily be inerrorbyafactoroftwoormore.
Whetherestimatingthetruecostofwindgeneratingcapacityorcostofelectricityproducedfrom wind, the cost of federal, state, and local tax breaks and subsidies are dominantfactors. There is no longer any serious doubt but that tax breaks and subsidies notenvironmental,energy, oreconomic benefits aretheprimary reasonsthatwindfarmsarebeingbuilt.
SIXPOINTSCRITICALTOANACCURATEUNDERSTANDINGOFTHEHIGHTRUECOSTANDLOWVALUEOFELECTRICITYFROMWIND
Comparing the cost of electricity from wind with the cost of electricity from reliablegenerating units is a classic apples to oranges comparison (or perhaps crab apples tooranges!). Thethingsbeingcomparedmaylooksimilarbut,infact,arevastlydifferent. Insummary,andasdetailedbelow,thosemakingcomparisonsofthecostofelectricityfromwindoftenoverlookfourcriticallyimportantfacts:
The full, true cost of electricity from wind is seldom revealed because of massivefederal, state, and local government tax breaks and subsidies for wind farmowners.
No one really knows the true cost per kilowatthour (kWh) of producing electricityfrom wind turbines because all such calculations are always based on assumptions(i.e.,guesses).
Thevalueofelectricitythatisproducedbywindturbinesismuchlowerthanthevalueofelectricityfromreliablegeneratingunitsbecausetheoutputfromwindturbinesisintermittent,volatile,unreliableandmostlikelytobeproducedwhenleastneeded.
The value of wind turbine generating capacity is much lower than the value of thecapacity of reliable generating units because wind turbines produce electricity only
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1 so they cannot be counted on
whenelectricitydemandreachespeaklevels.
POINT1: There isa fundamentaldifferencebetweenwind turbinesand reliableelectricgeneratingunits.
Thereis
a
vast
difference
between
electric
generating
units
that
produce
electricity
only
intermittently,suchaswindturbines,andreliablegeneratingunits thatcanbecountedontoproduceelectricitywhenitisneeded. Tobemorespecific:
1. Electricitycannotbestoredinsignificantamountsand,therefore,mustbeproducedasitisneeded(ordemanded)bycustomers. Demandforelectricitybycustomerswhetherresidential,commercial,orindustrial varieswidelybytimeofday,dayofweek, season of the year, prevailing weather and temperature, strength of theeconomy,andotherfactors
2.Managers
of
electric
grids
are
responsible
for
assuring
that
enough
electricity
is
always available to meet customers demand and, whiledoing this,must keep thegird inbalance(interms ofsupply& demand,voltageand frequency) . To do this,grid managers must always have available and under their control generatingunitsthatare:
a. Reliable,that is,theunit(s)mustbeavailableoroperableandhavenecessaryfuelsothatitcanbecountedontoproduceelectricitywhenitsoutputisneeded,and
b. Dispatchable,thatis,theunit(s)mustbesubjecttothegridmanagerscontrolsothat itcanbebroughton line(i.e.,beginproduction)ortakenoff line(i.e.,stop
production),and,
for
a
unit
on
line,
it
can
be
ramped
up
or
down
(i.e.,
increasing
ordecreasingitsoutput).
Inadditiontokeepingthegridinbalanceatalltimes,gridmanagersmustalsohavereliableanddispatchablegeneratingcapacityinreserve,whichcapacitycanbecalleduponimmediatelyifthereisanunplannedoutageofoneormoreonlinegeneratingunits (or transmission lines), or if there is a significant, unexpected increase inelectricitydemand.
Thewind industryoften pretendsthatthisoperating reserveofgenerating capacity
should
be
or
is
a
free
good
that
should
be
available
for
its
use
preferably
at
no
cost to make up for the fact that their wind turbines cant be counted on toproduceelectricitywhenit ispromisedorneeded(i.e.,theturbineshavelittleornoreal capacity value), especially at the time of peak electricity demand. However,
1 Theystartproducingwithwindsofabout6mph,reachratedcapacityaround32mph,cutoutaround56mph,
and restartabout45mph. Muchof the time theyproducenoelectricityoronlysmallamountswellbelow
ratedcapacity.
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cutting into a grids operating reserve means that there would be less of a reserveavailabletoitsrealpurpose.
3. Windturbinesarenotreliableordispatchable. Theyproduceelectricityonlywhenthewindisblowingwithintherightspeedrange(showninfootnote#1). Theiroutputisintermittent, volatile, largely unpredictable, and unreliable. If wind turbines are
connectedto
the
grid
serving
the
control
area,
the
grid
manager
must
have
reliable
generatingcapacityimmediatelyavailabletobackuptheintermittent,volatileandunreliableoutputfromwindturbinesandkeepthegridinbalance.
4. Generating units that qualify as reliable and dispatchable are those with turbinegeneratorspoweredbynaturalgas,oil,coal,nuclearenergyandhydropower.2 Howquicklyageneratingunitcanbebroughtonlineorrampedupordownvarieswidely,dependingonsuchfactorsasthegeneratingtechnology(e.g.,usingsteamturbineorgasturbine),theenergysource,andtheageandconditionoftheunit.
POINT2:
Wind
turbines
have
little
or
no
capacity
value.
Acriticallyimportantfactoraffectingthetruevalueofthecapacityofanygeneratingunitishowmuchoftheunitsratedornameplatecapacitycandefinitelybecountedontobeavailabletogenerateelectricity3andhowmuch itcandefinitelybecountedtoproduceatthe time of peak electricity demand in the control area. This measure is referred to in theelectricindustryastheunitscapacityvalue.
Infact,regardlessoftheirratedornameplatecapacity,4windturbinescantbecountedon to produce any electricity at the time it is most needed; i.e., when electricity demandreachespeaklevels.5 Therefore,windturbinesreallyhavelittleornorealcapacityvalue,
asthat
term
is
used
in
the
electric
industry.
Because wind turbines have little or no real capacity value, electric grid managersresponsible for assuring the reliability of electric service must, instead, look to othergenerating units i.e., those that are reliable and dispatchable for the capacity that isneeded at the time of peak electricity demand. In most areas of the US, peak electricitydemandislikelytooccurinlateafternoononhot,weekdaysinJulyorAugust.
Whenattemptingtocompareeitherthecostorvalueofelectricityfromwindturbines,itisimportanttorecognizethatthefactthatwindturbinesproducelittleornoelectricitymost
2 In some cases, generatingunits poweredby biomass, trash,geothermal energy, and perhaps, solar thermal
energymayalsoqualifyasreliableanddispatchable.3 Forawindturbine,theunitmustbebothoperableandhaveenoughwind.
4 Ageneratingunitsratedornameplatecapacityisexpressedintermsofkilowatts(kW)ormegawatts(MW)
whichisameasureoftheamountofelectricitythatcouldbeproducedbytheunitataninstantintimeifthe
unitwasproducingatfullcapacity.5 FormostareasoftheUS,peakelectricitydemandismostlikelytooccuronhot,weekdaylateafternoonsinJuly
or August. During these times there is little or no wind and, therefore, little or no electricity from wind
turbines.
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ofthetimemeansthattheirratedornameplatecapacityisnotcomparableinvaluetotheratedornameplatecapacityofareliablegeneratingunit. (Aclearexampleofthecrabappletoorangeanalogy.)
POINT3: Electricityproducedbywindturbinesi.e.,thekilowatthours(kWh)haslessrealvaluethanelectricityproducedbyreliablegeneratingunits.
The true value of a kilowatthour (kWh) of electricity depends on when it is produced.Specifically,akWhofelectricityproducedduring periodsofhighorpeakelectricitydemandhasmuchhighervaluethanakWhproducedwhendemand is low6(e.g.,duringnighttimehoursinmostareasoftheUS).
This,too, is a critically important fact whenattempting to compareeithercost orvalueofelectricity from wind turbines with electricity from reliable, dispatchable generating units.The fact is that electricity from wind turbines has a lower value per kWh because thatelectricityisnotonlyintermittent,volatile,largelyunpredictableandunreliable,butitisalso
most
likely
to
be
produced
at
night
and
in
colder
months
when
wind
speeds
are
adequate
to
spintheblades,notattimesofhighorpeakelectricitydemand.
Point4: Largepartsof the truecapitalandoperatingcostsofelectricityfromwindarehiddenbecausemassive federal, stateand local taxbreaksand subsidies shiftmuchofitstruecostfromwindfarmdevelopersandownerstotaxpayersandelectriccustomers.
Wind industry officials and lobbyists as well as the politicians, regulators, and othergovernment officials, government contractors, and nongovernment organizations (NGOs)thatsupportwindindustryinterests,oftenunderstategreatlythetruecostofwindfarms
and
electricity
produced
from
wind
farms.
Sadly,
some
electric
utility
officials
also
participateinhidingthetruecostsofelectricityfromwind.
Wheninitiallyproposed,therationaleforprovidingtaxbreaksandsubsidiesforwindenergywastohelparelativelynewtechnologyforproducingelectricitycompetewithestablishedelectric generating technologies until advances in technology would permit wind tocompetewithoutsubsidies.
However, the massive tax breaks and subsidies now available and the wind industrys wellfinanced lobbyingeffortstopreserve,expand,andextendthemmakesclearthatthere isno
longer
any
serious
expectation
that
electricity
from
wind
will
become
competitive
or
that
significantadvancesinwindtechnologyarelikelytoeverpermitwindtobecomeacompetitivesourceofelectricity.
6 Indisputable evidenceof this isavailable onweb sites for Independent SystemOperators (ISOs)or Regional
TransmissionOperators(RTOs)thatmanageelectricgridsintheUS. Suchwebsitesgenerallyprovidehourby
hour(ormorefrequent)dataonthewholesalepricesofelectricityincompetitivemarkets.8
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The US Energy Information Administration (EIA), in an April 2008 report,7 indicated thatfederal tax breaks and subsidies during 2007 averaged $0.2337 per kWh of electricityproducedbywindduring2007. However,thatEIAreportunderestimatedthetruecostofthetaxbreaksandsubsidiesforwindbecauseit:
Failed to take into account either the value of 5year double declining balanceaccelerated
depreciation
(described
below)
that
is
available
for
wind
farm
equipment,butnotavailableforreliablegeneratingunits.
Didnotcover,ofcourse,over$1billioninadditionaltaxbreaksandsubsidiesforwindenergyawardedin2009bytheUSDepartmentsofEnergyandTreasury(authorizedby various stimulus measures) allegedly to create jobs in the US. As indicatedbelow, a significant share of these awards were for projects owned by foreignentities,coveredequipmentmanufacturedinothercountries,orflowedtoownersofwindfarmswerealreadyunderconstructionorcompleted.
Did
not
cover
state
and
local
tax
breaks
and
subsidies
for
wind
farm
owners.
Amongthemanyfederal,stateandlocaltaxbreaksandsubsidies8thatreducewindfarmdevelopersandownerscosts whileshiftingthosecoststoordinarytaxpayersandelectriccustomersarethefollowing:
A. Federaltaxbreaksandsubsidies.1. AcceleratedDepreciation (MACRS).9 Nearly allthecapitalcostofawindfarm
whetherfinancedwithequityordebt canberecoveredthroughdeductionsfromotherwise taxable income using 5year double declining balance accelerated
depreciation
(5yr.
200%DB).
These
deductions
from
taxable
income
reduce
tax
liabilityattheownersmarginaltaxrate,usually$35foreach$100deduction. Allofthe eligible capital cost can be written off (recovered) over 6 tax years at thefollowingratesillustratedwith$100,000,000ineligiblecapitalcost:
7
US
EIA,
Federal
Financial
Interventions
and
Subsidies
in
Energy
Markets
2007,
table
35,
page
106.
http://www.eia.doe.gov/oiaf/servicerpt/subsidy2/pdf/chap5.pdf.8 Thissummary is limitedprimarilytotaxbreaksandsubsidiesthatbenefit industrialscalewindenergy. There
are others benefitting smaller scale installations installed by residential, commercial, industrial, educational,
andcommunityorganizations.9 MACRSstandsforIRSModifiedAcceleratedCostRecoverySystems,whichprescribesthemethodsthatcan
beusedtowriteoffcapitalcosts(i.e.,deductthecapitalcostoffacilities,whetherfinancedbyequityordebt,
fromtheorganizationsotherwisetaxableincome)overaperiodoftimethatisgenerallyshorterthantheuseful
lifeofthefacilities. DetailsofMACRScanbefoundinIRSpublication946.
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DeductionfromTaxableIncomeTaxYear %ofCapital
Investment AmountFurtherReductioninIncome
TaxLiability(inadditiontoPTC)1st 20% $20,000,000 $7,000,000
2nd 32% $32,000,000 $11,200,000
3
rd
19.2%
$19,200,000
$6,720,000
4th 11.52% $11,520,000 $4,032,000
5th 11.52% $11,520,000 $4,032,000
6th 5.76% $5,760,000 $2,016,000
Totals: 100% $100,000,000 $35,000,000
Note that these deductions from otherwise taxable income and from tax liabilitycould be taken regardless of whether the $100 million wind farm investment isfinancedwithdebtorequity.10
Note also that, in addition to the further reduction in tax liability, this generous
accelerateddepreciation
deduction
for
federal
income
tax
purposes
has
two
other
hugebenefits;specifically:
a. Prompt recovery of all the owners equity investment. Quite likely, the equityinvestmentbywindfarmownersandtheirtaxpartners11wouldbenomorethan 30% with the remaining borrowed to reduce its cost. As the table aboveshows, all of the equity investment would be recovered thru depreciationdeductionsearlyinthesecondtaxyearandinlessthan1yeariftheprojectbeginsoperating late in the first tax year. With no remaining equity investment, theownersreturnonequitywouldbeinfinite.
b. A large interestfree loan. Thedepreciationdeductioncontinueseventhoughallequity has been recovered. Thus, in effect, the owners receive an interest freeloan,courtesyofUStaxpayersforanamountequaltothedebtfinancing.
2. WindProductionTaxCredit(PTC). AwindfarmowneriseligibleforaWindPTC,currently $0.021 per kilowatthour (kWh), for electricity produced during the 1st 10yearsofoperation. ThenewexpirationdateforthePTCwasextendedtoDecember31, 2012. If the illustrative $100 million project had turbines with the combined,
10
Note
also
that
the
US
Congress
enacted
a
50%
1
st
year
bonus
deduction
for
many
capital
investments
placed
inserviceduring2008and2009asaneconomicstimulus. Theeffectofthisbonuspermittedwindfarm
ownerstodeduct60%inthe1st,16%inthe2
nd,9.6%inthe3
rd,5.76%inthe4
thand5
thand2.88%inthe6
thtax
years.11
Totakeadvantageofthelucrativetaxbreaks,awindfarmownermusthavesubstantialtaxableincomefrom
sourcesotherthanthewindfarm. Developerswhodonothaveenoughtaxable incomemerelyfindsome
other organization (often a large bank or Wall Street financial institution with large amounts of taxable
incometheywishtoshelterfrom incometaxes)thatwillbetheirpartnerandpartownerfortheperiodof
time(years)thatisnecessarytocapturethetaxbenefits. Thenthefullownershipflipstothedeveloper. The
developersandtaxpartnersarethebigwinnersandordinarytaxpayerswhobeartheburdenescapedbythe
windfarmownersarethebiglosers.
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ratedcapacityof50megawatts(MW)andtheyoperatedata30%capacityfactor12,the turbines would produce 131,400,000 kWh of electricity each year, the ownerswould receive a tax credit (a direct deduction form tax liability) of $2,759,400 peryearduringthefirst10yearsofoperation,thusreducingfederal incometax liabilityby$27,594,000over10years.13
3. InvestmentTaxCredit (ITC). Stimulus legislation enacted during 2008 and 2009permits wind farm owners to choose an investment tax credit (i.e., a directdeduction from taxes otherwise due) equal to 30% of capital costs in lieu of theProductionTaxCredit.IfthewindfarmownerdoesnothavesufficienttaxliabilitytousealloftheITCdeduction,unusedamountscanbecarriedforwardanddeductedinfutureyears. Thistaxbreakisavailableforprojectsplacedinserviceduring2009and2010orwhereconstructionhasstartedby2010andplacedinservicebeforetheend of 2012. The newly authorized ITC has substantial benefits for wind farmownerscomparedtothePTCbecause(i)thebenefit isavailable immediatelyratherthanovera10yearperiodand(ii)thebenefitisbasedoncapitalcostand,therefore,
is
available
regardless
of
the
amount
of
electricity
produced
by
the
wind
farm.
14
4. CashGrant inLieuofITC.Thegenerous20082009stimulus legislationalsomadewindfarmdeveloperseligiblefortheITCtoelecttoreceiveacashgrantofequalvalue from the US Treasury in lieu of the ITC. During September 2009, The USDepartments of Treasury and Energy awarded grants for wind farm projectstotalingabout$900million. $546millionornearly60%ofthetotal15wasawardedtotheSpainbasedfirm,Iberdrola. TheIberdrolaCEOhasindicatedthatheexpectstowinanother$470millioningrantsfromTreasuryandDOEduring2010.16
Creating jobs was, allegedly, a key reasonfor the $787billion stimulus legislation
butmost
of
wind
farm
projects
included
in
the
$1
billion
in
grants
awarded
by
TreasuryandDOEonSeptember1andSeptember22,2009,werefor(a)projectsthatwerealreadycompleted,nearlycompletedoralreadyfullycommittedtobythegrantrecipients, (b) were equipped with turbines manufactured primarily in othercountries, and (c) were owned by foreignbased companies. Furthermore, windfarmsresultinveryfewnewjobs,certainlyfewerthanwouldbecreatedbysimilarinvestmentsinreliablegeneratingunitspoweredbytraditionalenergysources.
12 Capacity factor is an after the fact measure determined by dividing the actual electricity production (in
kilowatthourskWhormegawatthoursMWhbytheratedcapacitytimesthehours intheperiodbeing
analyzed (e.g.,8760hours inayear). Forthe illustrationabove,thecalculationwouldbeas follows:Annual
productionof131,400,000kWhdividedby8760hoursx50MW(50,000kW)capacity=30%capacityfactor.13
Inreality,capacityfactorsmaydecreasesomewhatasturbinesageduetogearboxfailures,bladecracking,and
bladesbecomefouledfrominsects,hittingbirdsandbats,etc.14
Separatingthetaxbreakfromactualelectricityproduction,ineffect,reducestheownersincentivetomaintain
turbinesandotherwindfarmequipmentsoastomaximizeproduction.15
http://www.greenjobs.com/public/industrynews/inews06694.htm.16
http://www.windwatch.org/news/2009/12/17/iberdrolachiefwarnsoncostofgreenpower/.
11
http://www.greenjobs.com/public/industrynews/inews06694.htmhttp://www.greenjobs.com/public/industrynews/inews06694.htm -
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(Clearly,anyclaimthatthehugeexpenditureoftaxdollarsthatweregiventoownersof wind farms would provide significant job and economic benefits in the UScannotbetakenseriously.)
5. LoosenedRequirementsfortaxbreaksandsubsidies. Thesamestimuluslegislationalso relaxed a number of restrictions on that had applied to the tax breaks and
subsidies.
A
report
recently
released
by
DOEs
Lawrence
Berkeley
National
Laboratory (LBNL) while objectionable in several respects provides a usefulsummaryofgeneroustaxbreaksandsubsidiesnowavailableforwindfarms.17
6. US Department Agriculture Grants. While not targeting large commercial windfarms,avarietyofrenewableenergyproductionincentives,18grants,19loans,20andlow interest bond 21arrangements are available for certain wind energy projects.These are also summarized in the LBNL report cited above. Some of thesearrangements are available for large wind turbine projects owned by Rural Electriccooperativesandpublicpowerorganizationsownedbystateandlocalgovernments.
7. DOE Loan Program. A DOE loan program intended to encourage thecommercialization of innovative energy technologies was first authorized by theEnergy Policy Act of 2005 and then was substantially expanded by the AmericanRecovery and Reinvestment Act of 2009. Billions in loans and loan guarantees areavailable for various renewable energy (including wind) and energy efficiencyprojects. Onewindproject(NordicWindpower)hasbeenapprovedviathisprogramfor a $16 million loan. Final regulations for this DOE program were issued onDecember7,200922
8. AdditionalUSDepartment of Energy (DOE) Subsidies. The DOE provides severaladditional
subsidies
to
the
wind
industry,
all
financed
with
tax
dollars,
including:
a. Some$60to$100millionperyearforwindenergyR&Dcontractsandgrants.b. Additional millions in taxpayer dollars for studies, analyses, reports, and
other wind energy promotional information prepared by or for DOEs Office ofEnergy Efficiency and Renewable Energy (DOEEERE), DOEs National EnergyLaboratories,23stateenergyoffices,andotherDOEcontractorsandgrantees.
17 Bolinger,Mark,LawrenceBerkeleyNationalLaboratory(LBNL),RevealingtheHiddenValuethattheFederal
Investment
Tax
Credit
and
Treasury
Cash
Grant
Provide
To
Community
Wind
Projects,
January
2010;
pp.
6
16.
Apparently, theobjectiveof the report is topromotecommunitywindprojectsbyoutlining thegenerous
new taxbreaksmadeavailable forsuchprojects. The reportmakesnoattempt toevaluate theexceedingly
smallbenefitsthatresultfromthehighcosttotaxpayersandelectriccustomersofcommunitywindprojects.18
http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US33F&re=1&ee=1.19
http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US05F&re=1&ee=1.20
http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US46F&re=1&ee=1.21
http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US45F&re=1&ee=1.22
http://www.lgprogram.energy.gov/press/FR12709.pdf.23
Particularly the National Renewable Energy Laboratory (NREL) and the Lawrence Berkeley National
Laboratory(LBNL).
12
http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US33F&re=1&ee=1http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US05F&re=1&ee=1http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US46F&re=1&ee=1http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US45F&re=1&ee=1http://www.lgprogram.energy.gov/press/FR-12709.pdfhttp://www.lgprogram.energy.gov/press/FR-12709.pdfhttp://www.lgprogram.energy.gov/press/FR-12709.pdfhttp://www.lgprogram.energy.gov/press/FR-12709.pdfhttp://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US45F&re=1&ee=1http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US46F&re=1&ee=1http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US05F&re=1&ee=1http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US33F&re=1&ee=1 -
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WhiletheNationallaboratoriesundoubtedlyperformsomeobjectiveworkthatis based on scientific methods and engineering principles, much of theinformation issued by these organizations that deals with wind energy isdemonstrably biased, misleading, and even false. These laboratory activitiesare more akin to those carried out by trade associations that typically provide
onesided
information
(or
propaganda)
that
is
used
to
influence
the
public,
media
andgovernmentofficials.24
c. More taxpayer dollars flowing though DOE and NREL to support various stategovernment wind promotional activities and to state wind working groups,25consistingofwindindustryrepresentativesandotherwindenergyadvocates(butseldom, if ever, include representatives from citizen groups opposed to windfarms)thatworkinsupportofwindindustryobjectives.
9. MandateduseofrenewableenergybyFederalAgencies.26 TheEnergyPolicyActof
2005
requires
the
following
amounts
of
total
electricity
consumed
by
the
Federal
Governmenttocomefromrenewableenergy:
Nolessthan3%infiscalyears20072009 Nolessthan5%infiscalyears20102012 Nolessthan7.5%infiscalyear2013andthereafter.PresidentialExecutiveOrder13423,issuedinJanuary2007,requiresthatatleastonehalf of the required electricity from renewable energy come from new renewablesources. In fact, much of the electricity from renewable energy purchased byfederal agencies comes from wind turbines. Like mandated state green energy
programs,
this
federal
requirement
in
effect
requires
that
federal
agencies
pay
premiumpricesforpartoftheelectricitytheyuse,thuscreatingaspecial,highpricedmarket that is available to wind farms. The higherthanmarket premiums thatmustbepaidforelectricityfromwindareanothersubsidyforthewindindustry. Thehigher prices are paid from agency appropriations which are financed through taxdollars.
10.PubliclandsmanagedbytheUSBureauofLandManagementandUSForestService.Both agencies havepoliciesandregulationsdealingwiththeconstructionof windfarms and related transmission facilities on public lands that they manage. More
than
300
MW
of
wind
turbine
capacity
is
now
located
on
BLMmanaged
lands.
27
24 Examples include NRELs Jobs and Economic Development Impact (JEDI) model that overstates local and
state benefits from wind farms, and LBNLs recent report that claims, falsely, that wind farms do not
adverselyaffectthevaluesofnearbyproperties.25
http://www.windpoweringamerica.gov/state_activities.asp.26
http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US01R&re=1&ee=1.27
http://www.blm.gov/pgdata/etc/medialib/blm/wo/MINERALS__REALTY__AND_RESOURCE_PROTECTION
_/energy.Par.58306.File.dat/09factsheetmap_Wind.pdf.
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Typically, rents charged by BLM and USFS are lower than those charged forcomparableprivatelands.
11.Tax breaks and subsidies for wind farm equipmentmanufacturers. One 2009economicstimulusmeasure28establishedanew$2.3billion investmenttaxcreditto encourage the development of a U.S.based renewable energy manufacturing
sector.In
any
taxable
year,
the
investment
tax
credit
is
equal
to
30%
of
the
qualified
investment required for an advanced energy project that establishes, reequips orexpandsamanufacturingfacilitythatproduces29somethingconsideredbytheUSTreasury and Energy Departments as an energy efficiency, conservation, orrenewableenergytechnology,includingwindenergy.
Theapplicationprocessconductedduringthefallof2009resultedintheselectionofdozensofprojectsthatapparentlyexhaustedthe$2.3billionauthorization. Projectsselected for this new tax break included 33 projects involving wind turbines,bearings, towers, and blades totaling more than $250,000,000. Treasury and DOE
have
announced
that
no
more
applications
are
being
accepted
for
this
program.
30
However,PresidentsFY2011budgetrequestsanadditional$5billionfortheprogram.
B. Statetaxbreaksandsubsidiesforwindfarmowners. Manystategovernmentshaveadopted generous tax breaks and subsidies that benefit wind farm developers andowners adding more to the costs that are shifted from developers and owners toordinary taxpayers and electric customers and hidden in their tax bills and monthlyelectricbills.
The specific tax breaks and subsidies vary widely among states. Information for eachstate can be found at a taxpayer financed web site, Database of State Incentives for
Renewables
&
Efficiency,
www.dsireusa.org.
Among
the
scores
of
incentives
forindustrial scale wind farms provided by at least one and often more states are:
1. Stateproductiontaxcredits(e.g.,Iowa).2. Exemptionsfromallorpartofpropertytaxes(e.g.,Iowa,WestVirginia,NewYork).3. Artificiallylowassessments onwindturbines(e.g.,Illinois).4. Exemptions from sales tax on wind farm equipment and materials (e.g.,
Minnesota).5. Lowcostloans(e.g.,industrialdevelopmentbonds).6. RenewablePortfolioStandards(RPS)thattypicallyprescribedsomepercentageofa
distribution utilitys sales must consist of electricity produced from wind or someother
renewable
energy
source
(about
20
states).
7. Purchases of, or markets for, green energy certificates earned by producers ofelectricityfromwind(e.g.,Massachusetts).
28 TheAmericanRecoveryandReinvestmentActof2009(H.R.1),enactedinFebruary2009.
29 http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US52F&re=1&ee=1.
30 http://www.whitehouse.gov/thepressoffice/factsheet23billionnewcleanenergymanufacturingtax
credits.
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8. Green energy programs by electric distribution companies that offer electricityproduced from wind at a premium price either required or encouraged by statePUCorlegislature(manystates).
9. Payments for green energy attributes using revenue collected via a systemsbenefitcharge(effectively,atax)addedtoelectricbills(e.g.,NewYork).
10. Higherallowedearningsforelectricutilityinvestmentsinrenewableenergyfacilities(e.g.,
Virginia).
Atleastfouroftheabovestaterequirements(6,7,8and9)havetheeffectofcreatingaspecialmarketwhereownersofwindfarmsandotherrenewableenergyfacilitiescansell their electricity at above market prices. Of course, the electricity actually used bycustomers paying extra for green electricity is highly unlikely to be produced by arenewableenergyfacility.
Theownerscanreceivethehigher,abovemarketpricesfortheelectricitytheyproduceeveniftheirfacilitiesarenotproducingatthetimetheelectricityisbeingused.
Utilities green energy programs are seldom self supporting. That is, the amountscollectedinpremiumsfromcustomerswhoagreetopayextraarenotadequatetocover(i)thehighercostsofthegreenenergyand(ii)theutilityscostofadministeringthegreen program. Costs not recovered from premium payments are merely passedalongtoalloftheutilityscustomers.
C. Localgovernmentandeconomicdevelopmentagencytaxbreaksandsubsidies. Somelocal government and economic development officials believe that construction ofwindfarms intheirareaswillprovidenew jobsandothereconomicbenefits. Actualbenefits tend to be much less than assumed by wind farm developers and local
officials.
Further,the
cost
of
any
such
benefits
is,
in
one
way
or
another,
shifted
to
ordinarytaxpayersand/orelectriccustomers.
There is no readily available, comprehensive source of information on locally providedtaxbreaksandsubsidies. However,examplesinclude:
1. Low cost loans or bond financing. County or regional economic developmentauthorities may have authority to offer low cost or interest free loans or bondfinancingwhichsignificantlyreduceawindfarmownerscapitalcost.
2.Acceptance
of
payments
in
lieu
of
taxes
or
PILOTS.
For
example,
local
government
and school board officials in some towns in New York accept PILOTS from windfarm owners and give up their statutory authority to override a stateauthorizedexemptionfrompropertytaxes. PILOTsareattractivetolocalofficialsbecausetheytendtobefrontendloaded;thatis,theyprovidesignificantearlybenefitsthatcanbe presented to local voters as an opportunity for near term reductions in homeowners property taxes, new fire trucks or other equipment, restoration of historicbuildings, orother measuresthat cantbe accommodated in local budgets without
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PILOTS are attractive to wind farm owners because their cost over the assumedlifeofthewindfarmaremuchlessthanpayingpropertytaxesandthefrontendbenefitsareoftenhelpfulingainingsupportforprojectsfromcurrenttownofficials
and,perhaps,
citizens
who
do
not
take
into
account
the
lower
long
term
benefits
or
impacts.
POINT5: Otherimportantelementsofthefull,truecostofelectricityfromwindareoftenhiddenorignoredbywindenergyadvocates.
Taxbreaksandsubsidiesarenottheonlyelementsofthefull,truecostofelectricityfromwind that are not transparent and that are often ignored by wind energy advocates. Forexample,additionalelementsofthefull,truecostofelectricityfromwindinclude:
A.Providing
reliable
generation
to
backup
intermittent,
unreliable
generation
from
wind.
Because electricity from wind turbines depends on availability and speed of wind, gridmanagers must always have immediately available enough reliable, dispatchablegenerating capacity to keep grids in balance as wind turbines start producing, varywidelyinoutput,orstopproducing.
Adequate capacity is available on some grids to meet this requirement, but there arecostsofprovidingthisbackupandbalancingservice,whether it isthroughtheuseofaunit running in automatic generation control (AGC) mode, otherwise less than fullcapacity,orinspinningreserve.
Gridmanagers
must
have
available
and
under
their
control
reliable
generating
units
that
canberampedupordown(i.e.,outputincreasedordecreased)orbroughtonline(startproducing)ortakenoffline(stopproducing). Rampingupanddowntobalancevolatilewindturbineoutputmayaddtowearandtearonthebackupunits.
Acriticallyimportantobjectiveinelectricgridmanagementistohavesufficientoperatingreservecapacityavailabletokeepelectricservicereliableandkeepthegridinbalanceinthe event that key generating units (or transmission lines) unexpectedly becomeunavailable (e.g., mechanical failures or other unplanned outages), or if there is asignificant, unexpected increase in demand. Wind industry advocates often assume,
incorrectly,
that
this
critically
important
grid
operating
reserve
should
be
available
as
a
free backupor balancingservice forthe intermittent, volatile,and unreliableoutput ofwindturbines.
Providingbalancingandbackupcapabilityfor intermittent,volatile,andunreliablewindturbineoutput involvescostthat isproperlyconsideredapartofthecostofelectricityfromwind. Forexample,unitsthatareavailableforrampingupmustberunningatlessthanfullcapacityand,therefore,atlessthanfullefficiency. Unitsthatarerampeddownalsorunatlessthanfullcapacity. Unitsthatareavailabletobringonlinearelikelytobe
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running in spinning reservemode (i.e., connected to and synchronized withthe gridbutinputtinglittleornoelectricity)andusingsomefuelandputtingoutsomeemissions.Thesecostsarereallyapartofthetruecostofelectricityfromwind.
Furthermore,ifadequatecapacityfromreliablegeneratingunitsisnotavailable,backupcapacity would have to be constructed resulting in additional costs that are, at some
point,passed
on
to
customers.
It
must
always
be
recognized
that
wind
turbines
do
not
provide reliable, dispatchable generating capacity and they cannot be counted as asubstituteforsuchreliablecapacity.
B. Wind farmsplace an extra burdenongridmanagers. Grid managers face a moredifficult task in keeping grids in balance when winds are sufficient to permit windturbinestoproduceelectricity. Becausetheoutputfromwindturbinesvarieswithwindspeed, the output that must be managed is volatile. The extent of the burden differswidely amongwindfarms and among grids depending on many factors,such as theenergy source mix of generating capacity in the control area, the amount of wind
generation
and
its
volatility,
and
electricity
demand.
The challenges of integrating into electric grids the intermittent, volatile andunreliableoutputfromwindturbineshasfinallybeenacknowledgedbytheChairmanofFERCinaJanuary21,2010,statement31announcingaFERCNoticeofInquiry.32 Hopefullythis proceeding will lead to greater official and media candor about the challenges ofintegratingtheoutputofwindfarmsintoelectricgrids.
C. Electricity fromwind results in higher costof transmission. Areas where winds aresometimes strong enough to power wind turbines are often located at considerabledistance from areas where electricity is needed (i.e., load centers). Furthermore,
windfarms
are
not
welcome
near
residential
areas,
even
if
wind
conditions
may
be
adequate, because of the large size of the wind turbines (400+ feet or more than 40stories tall), because of their noise and other nuisance impacts, because of theirenvironmental damage, and because of their adverse impacts on neighbors propertyvalues.
Theneteffectoftheaboveconditionsisthatelectricityfromwindturbinesentailshighcosts of transmitting that electricity to the areas where the electricity can be used.Threefactorsareinvolved:
1.
First,
because
wind
farms
are
likely
to
be
located
at
some
distance
from
load
centersthelossesduringtransmission(i.e.,linelosses)tendtobehigherthaninthecaseofelectricitygeneratedbyunitsclosertoloadcenters.
31 http://www.ferc.gov/news/statements speeches/wellinghoff/2010/012110wellinghoffE4.asp.
32 http://www.ferc.gov/whats new/commmeet/2010/012110/E4.pdf.
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2. Second, wind farms make inefficient use of transmission capacity. Enoughtransmission capacity must be available to serve the full rated output of a windfarm. However, because wind turbines produce at full rated capacity only whenwindspeedsareabout32MPHorhigher,thefulltransmissioncapacity isusedonlyon a minority, parttime basis. The effect of this is that the unit cost per kWh ofmoving the electricity that is produced tends to be higher than for electricity from
reliablegenerating
units.
3. Third,andespeciallycostly,isthefactthatwindfarmshavebeenbuiltorarebeingproposed in areas that have insufficient or no transmission capacity to move theelectricity that is produced. This means that expensive new transmission capacitywouldhavetobebuiltjusttoaccommodatetheneworproposedwindfarms.
Someareaswheresubstantialwindgeneratingcapacityhasbeenbuiltorisproposedrequire major increases in transmission capacity (e.g., Texas) to serve the windfarms. While the cost of building the additional capacity is clearly a cost that is
properly
attributed
to
the
cost
of
the
electricity
from
wind,
the
wind
industry
seeks
toavoidthiscostandhaveitallocatedtoi.e.,chargedto electriccustomersasapart of their month bills as if it is a normal part of the cost of providing theirelectricservice.
Sadly,somepublicutilityregulatorshaveaccededtothewishesofthewindindustry.Billionsofdollarsare involvedbutthewind industry and utility commissionershidethe enormity of the costs by spreading them over all the electric customers in thearea. Onceagain,regulatorsareprovidinganotherhugesubsidytothewindindustryratherthanprotectingelectriccustomers.
POINT6:
Noone
really
knows
the
true
cost
per
kilowatt
hour
(kWh)
of
electricity
from
wind turbines because all estimates of such costs are based on highlyquestionableassumptionsreallyguessesthatareuntested.
Manyclaimsaremadeaboutthecostperkilowatthourofelectricityproducedfromwindbut,infact,noonereallyknowsthetruecost.
Anyoneinterestedinthefactsshouldbeverywaryofclaimsmadebythewindindustry,itssupporters employed by the federal and state governments, the DOE NationalLaboratories or other wind energy advocates. Data reported by the media are invalid
because
they
typically
are
parroted
from
one
of
these
sources.
A true, meaningful calculation of the cost of per kWh of electricity produced by windturbinesinevitablyrequiresdatathatcanbeknownonlyonanafterthefactbasis. Claims
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that have been made about costs per kWh of electricity from wind turbines are roughestimatesbasedonassumptions(guesses)andoftendonotincludeallelementsofcost.33
Keyfactorsthatcannotbeknowninadvanceincludeatleastthefollowing:
Totaloperatingandmaintenance(O&M)andreplacementcostsduringtheassumedlife
of
the
turbines.
Useful,productivelifeoftheturbine(s). Amountofelectricity(kilowatthourskWh)thatwillbeproducedduringtheuseful
life,takingintoaccountturbineandequipmentoutofservicetime,anddeteriorationinoutputasturbines,bladesandotherequipmentage.
Decommissioningcosts.NoneofthewindturbinesofthetypenowbeinginstalledintheUShaveoperatinghistorieslongenoughtoprovidevalid,reliableestimatesforthesefactors.
Claimsthat
are
made
by
wind
energy
advocates
typically
include
assumptions
about
O&M
costsandreplacementcosts,usefullife(oftenassumedtobe20years),andcapacityfactor(oftenassumedtobesomethingintherangeof25%to35%).
TwohighlysimplifiedexamplesillustratetheextenttowhichcostperkWhcalculationscanbemisleadingifbeforethefactguessesproveincorrect. Inthesesimplifiedexampleswhichuses a rough estimate of one element of cost (i.e., overnight capital costs), only one keyfactortheestimatedusefullifeoftheturbines ischangedbuttheimpactoncostperkWhisdoubled.
Example#1 Example#2Capacityof"windFarm"(kW) 50,000 50,000
AssumedCapacityFactor 30% 30%
AnnualElectricityProduction(kWh) 131,400,000 131,400,000
AssumedUsefulLife 20years 10years
ElectricityProducedDuringUsefulLife(kWh)
(131,400,000xyearsofusefullife)2,628,000,000 1,314,000,000
OvernightCapitalCost $100,000,000 $100,000,000
OvernightCapitalCostperkWhDuringUsefulLife $0.038perkWh $0.076perkWh
There is one potentially promising development in the long standing saga of DOENRELmisinformationaboutthecostperkWhofelectricityfromwind. Thatis,ahighlymisleading,fact less, assumption based graph showing an 80% decline in the cost of electricity from
33 Forexample,seeHarper,John,MattKarcher,MarkBolinger.2007.WindProjectFinancingStructures:AReview
&ComparativeAnalysis.LBNL63434.Berkeley,Calif.:LawrenceBerkeleyNationalLaboratory. http://eetd.lbl.gov/EA/EMP/reports/63434.pdf. SeeTableB1,page61inAppendixBfordetailedlistofcosts.
19
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windwithfurtherdeclineslikely apparentlyhasbeenabandoned. EventhehighlybiasedDOEEERE folks admit that their data show the cost per kWh of electricity from wind hasbeen rising, not falling.34 Unfortunately, there seem to be hundreds of reporters whorememberthemisleadinggraphandfalse80%declineclaimandwillcontinueparrotingthatclaimforyearstocome.
THE PRECEDING POINTS ARE FOCUSED ON FINANCIAL COST AND VALUE, NOTEXTERNALITIES
Theforegoingdiscussionhasbeenfocusedonthefinancialcostsofproducingelectricityandthefinancialvalueofthatelectricity. Ithasnotdealtwithexternalcosts,commonlyreferredtoasexternalities;i.e.,thecostsnotreflectedinthepricechargedfortheelectricity.
A discussion of externalities associated with each source of energy used to produceelectricity is far beyond the scope of this paper. However, it should be noted that windenergyadvocatesgenerallyassignhighexternalityvaluestoothersourcesofenergywhile
assigningnone
for
wind
energy.
In
fact,
producing
electricity
with
wind
energy
does
impose
externalcosts,includingadverseimpactsonenvironmental,ecological,scenic,andpropertyvalues.
Examples of adverse environmental and ecological impacts include noise, dead birds andbats, destruction of vegetation and disruption of ecosystems and wildlife habitat, andnuisanceimpactssuchasshadowflicker. Claimsthatwindfarmsdonotadverselyaffectneighbors property values, such as those made recently in a report from the LawrenceBerkeleyNationalLaboratory(LBNL)defycommonsenseandfactsevidentfromaroundtheworld.
Fortunately,mediastoriesreportingontheadverseimpactsofwindfarmshavebeguntoappearinthemediaandevenintheJournaloftheAmericanBarAssociation.35
CONCLUSIONS
Therearenolongeranyseriousquestionsbutthat:
1. Windindustryofficialsandlobbyistscontinuetounderstategreatlythefull,truecostof electricity from wind and have been successful in creating a false popular
wisdom
about
wind
energy.
2. The public, media and government officials have been misled and repeat false andmisleadingclaims.
34 DOE,2008WindTechnologyMarketReport,July2009,Figure13,page26.
35 http://www.abajournal.com/magazine/article/the_war_of_winds/.
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3. Government officials particularly legislators and regulators are providing taxbreaks and subsidies for wind energy without understanding or considering thebenefits and costs of their actions, and they are helping to hide costs in tax andelectricbills.
4. Governmentagencies,includingtheUSDepartmentofEnergy(particularlyitsOfficeof
Energy
Efficiency
and
Renewable
Energy
DOE
EERE),
the
DOE
National
Laboratories (particularly NREL and LBNL), other DOE contractors, and stateenergy agencies and public utility commissions are conducting and supportingactivities and issuing information about wind energy that helps mislead the public,mediaandpoliticalleaders.
5. Claims that the hundreds of millions of tax dollars being thrown at wind farmprojectsareanefficientandeffectivewayofcreatingjobsintheUSareFALSE. (Thefactthatalargeshareofthosetaxdollarsareflowingtoforeigncountries turbinemanufacturers and wind farm owners should be a clue that would give some
pause
to
Obama
Administration
officials
and
members
of
Congress.)
6. Someinvestorsinwindfarmsarehighlylikelytobemakingfinancialcommitmentswithoutunderstandingthefactsaboutthehightruecostandlowvalueofelectricityfromwind.
7. Landownersareleasinglandtowindfarmdeveloperswithoutunderstandingtheadverse impactthat wind turbines have on environmental, ecological, scenic andneighborspropertyvalues.
8. Localgovernmentofficials,misledbywindfarmdevelopersandluredbypotentialshort
term
financial
benefits,
are
fracturing
their
communities,
destroying
home
owners property values, and ignoring longterm costs when they encourage orcondonewindenergyprojects.
9. Energy economists and analysts in government and the private sector, as well asreporters and editors, need a far better understanding of the facts about windenergycostandvaluesthantheyhavedisplayedthusfar.
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GlennSchleede is semiretired after working onenergy matters formorethan 30 years ingovernment and the private sector. He often writes about energy issues, particularly aboutpoliciesandactionsthatadverselyaffecttaxpayersandconsumers.
22