Testimony - Wind Power: Not Green but Red
May 01, 2004
Energy is and will remain an important factor in the U.S.'s economic growth. While for much the 20th Century, America has enjoyed excess energy capacity in the transportation and utility sectors, this is no longer the case. Sustained economic growth since 1980s combined with declining domestic fuel production, an aging energy delivery infrastructure, increasing numbers of power plants reaching the end of their licensed and/or productive lives and increased federal, state and local regulatory barriers to the construction of new power plants have produced rapidly rising energy prices. Estimates indicate that during the next 20 years, U.S. oil consumption will grow by one-third and electricity demand could increase by more than 45 percent. To meet these needs the Bush administration has estimated that the U.S. will need to bring between 1,300 and 1,900 new power plants on-line during the next 20 years. Leaving aside for the moment, how this energy will get from the power plant to our homes and businesses - the transmission problem - the question is what will be the source of energy for these power plants.
Fossil fuels are relatively abundant and are significantly less costly than renewable energy sources such as wind power, solar power, geothermal power and the burning of biomass. However, the price of renewable energy, particularly wind power, has fallen significantly in recent years and is quickly becoming, under certain conditions, cost competitive with conventional fossil fuel energy. Environmentalists also point out that burning fossil fuels causes air pollution and emits greenhouse gases which, many people argue, are causing potentially catastrophic global warming. In short, renewable energy promoters claim that wind power is both cheap and "green." Neither claim is true.
Wind Power on the Rise. The price of wind generated energy fell more steeply than any other energy source over the past 30 years. Indeed, the cost of wind power fell from approximately 25 cents per kilowatt hour (kwh) in the early 1980s to between 5 cents and 7 cents (adjusting for inflation) in prime wind farm areas a decade later. Wind advocates argue that a new generation of turbines will bring the cost down below 5 cents per kwh - which is competitive with conventional fossil fuel sources for electricity generation.
Wind power, currently less than 1 percent of the U.S. power supply, could double its share within 10 years. The American Wind Energy Association has optimistically projected that wind power could provide as much as 6 percent of the nation's energy by 2020.
Green Power Bleeds Red: Birds and Bats and Blood, Oh My! The most publicized environmental harm caused by wind power may be its effects on birds and bats. Wind farms must be located where the wind blows fairly constantly. Unfortunately, such locations are prime travel routes for migratory birds, including protected species like Bald Eagles and Golden Eagles. The Sierra Club labeled wind towers "the Cuisinarts of the air." Why?
Scientists estimate as many as 44,000 birds have been killed over the past two decades by wind turbines in the Altamont Pass, east of San Francisco.
The victims include kestrels and red-tailed hawks, and - since the area is home to the largest resident population of golden eagles in the lower 48 states - an average of 50 golden eagles each year.
Exacerbating the problems, as one study explains, "Wind farms have been documented to act as both bait and executioner - rodents taking shelter at the base of turbines multiply with the protection from raptors, while in turn their greater numbers attract more raptors to the farm."
Further, at least 400 migrating bats, including red bats, eastern pipistrelles, hoary bats, and possibly endangered Indiana bats, were killed at a 44-turbine wind farm in West Virginia in 2003.
This is also a problem in other countries. At Tarifa in Spain, the site of 269 wind turbines, thousands of birds from more than 13 protected species have been killed.
Lawsuits may prevent the expansion of wind farms in West Virginia and California, and the construction of wind farms off the New England coast. Indeed, the lead scientist for the Audubon Society called for a moratorium on new wind development in bird-sensitive areas - which includes most of the suitable sites for construction.
Wind Power Still in the Red: Growing, Growing, Gone. While the price of wind power has fallen, it still costs more than spot market electric power (3.5 to 4 cents kwh). The price gap between wind power and conventional power plants is actually greater, since wind power is directly subsidized by the federal government several state governments. Wind farms are being built in the U.S. primarily for 5 key reasons:
a) wind power is subsidized by the federal government through a production tax credit of 1.8 cents per kwh (this tax credit enables wind farm owners to avoid over $100 million in federal income taxes in 2002 - an amount which grows each year as the number of wind farms grow);
b) Wind power plants also get accelerated depreciation, allowing owners to write off their costs in five years rather than the usual 20 (this permits wind farm owners to shelter over $500 million in 2002 income from federal taxes);
c) state subsidies such as the $0.01 per kwh tax credit in New Mexico;
d) green energy mandates or renewable portfolio standards - 19 states require distribution utilities provide some energy from "green" or renewable energy producers, 25 states permit utilities to charge premium prices for renewable energy to customers who chose to take such energy (so far fewer than 2 percent of customers offered this opportunity vote with their dollars and take advantage of the service), since the amount charged doesn't reflect the true cost of getting green energy to market (green energy's share of new transmission lines is not captured when wind farms are proposed) those who don't choose green energy still pick up some of the costs;
e) Public relations - providing a portion of the utilities electricity from renewable sources to show environmental concern . These subsidies, and green power mandates account for most and perhaps all of the recent growth in wind power.
Indeed, evidence of how critical just one of these reasons is to the "success" of wind farms, when 1.8 cent kwh tax credit lapsed in 2003:
California's Clipper Windpower abandoned already approved plans to build 67 windmills in Maryland.
As of January 8, 2004, orders for wind towers from the builder Beaird Industries ground to a halt, costing the company 200 jobs.
Vestas Wind Technologies shelved plans to build a manufacturing plant in Portland, Oregon.
More than 1,000 megawatts of wind power that would have been added in 2004 with the tax in place The American Wind Energy Association estimates that the expiration of the tax credit cost the grid.
Green Power Equals Low Power Blight. Wind power's environmental benefits are usually overstated, while its significant environmental harms are often ignored.
Promised air pollution improvements have failed to materialize. Wind farms generate power only when the wind is blowing within a certain range of speed. When there is too little wind, wind towers don't generate power; but when the wind is too strong, they must be shut down for fear of being blown down. Even when they function properly, wind farms average output is less than 30 percent of their theoretical capacity compared to 85 to 95 percent for combined-cycle gas fired plants.
Because of intermittency problems, wind farms need conventional power plants to supplement the power they do supply. Bringing a conventional power plant on line to supply power is not as simple as turning on a switch; therefore most "redundant" fossil fuel power stations must run, even if at reduced levels, continuously. Accordingly, very little fossil-fired electricity will be displaced and few emissions will be avoided because fossil-fueled units (operating at less than their peak capacity and efficiency or operating in "spinning reserve" mode - which means they are emitting more pollution per energy produced than if operating at peak efficiency, imagine a car idling near train tracks in case the power goes out) must be kept immediately available to supply electricity when the output from wind turbines drop because wind speed slows or falls below minimums required to power the turbines. Kilowatt-hours produced by wind turbines cannot be assumed displace the emissions associated with an equal number of kWh from fossil-fueled generating units. Combined with the pollutants emitted and CO2 released in the manufacture and maintenance of wind towers and their associated infrastructure, substituting wind power for fossil fuels does not improve air quality very much.
What about CO2? Recently researchers, Mark Jacobson and Gilbert Master's calculated that the U.S. could meet its Kyoto emission reduction goals by replacing 59 percent of coal's share of electricity production (Coal currently produces over 50 percent of the electricity generated in the U.S.) with 214,000 to 236,000, 1500 Kw windmills. They indicated that these windmills would require land space the size of South Dakota. This does not include the thousands of square miles of new transmission lines needed to deliver the energy to utilities. Because of intermittency and wind power's notorious low output when compared to theoretical capacity, Glenn Schleede has calculated that the actual number of windmills needed to replace 59 percent of coal-generated electricity would be approximately 294,500. This does not, however, look at the EIA's estimate of the new coal fired power plants that will come on-line by 2010. Replacing expected new coal generation would require an additional 71,000 1500 Kw windmills. As pointed out above, because of wind's intermittency, the coal plants would not actually be replaced or displaced, rather they would have to be maintained and idling. The "redundant" coal plants would continue to emit CO2. And having the backup system in place would be very expensive. Like a person having a second car (idling in the driveway) just in case the one he normally drives to work doesn't start.
What about the Cost? The cost data usually associated with proposed wind farms is misleading in the extreme because:
Calculations of costs for wind energy are highly dependent on assumptions about facility lifetime. Calculations often assume 20 or 30 years when no one has experience with actual life of today's wind turbines or their O&M, repair and replacement costs over 20-30 year periods.
Proponents assumes that the huge federal subsidies for wind facilities (which merely shift cost from "wind farm" owners to taxpayers and electric customers and hide them in tax bills and monthly electric bills) are not a part of the true costs.
The cited costs for electricity from wind apparently do not take into account the cost of providing backup generation or the extra costs of transmission and grid management.
Transmission capacity and costs. Lack of transmission capacity is a barrier to economic growth and electricity production in general but even more so for wind energy. Why? The intermittent and highly variable output from "wind farms" makes inefficient use of transmission capacity and cannot by itself justify the costs of adding new transmission capacity. When transmission capacity is added to serve "wind farms," the costs should be counted as part of the full cost of the wind-generated electricity. The wind industry is seeking to avoid these costs by getting regulators to roll them into base rates, thus shifting the costs from "wind farm" developers to all electric customers. (Such a case involving over $100 million is underway in Minnesota.)
Wind farms are also land-intensive and unsightly. In Europe, wind power is growing at even a faster rate than in the United States. Wind Power Monthly, the British magazine for the wind industry and enthusiasts, has reportedly recognized that the growing unpopularity of wind power is due to the industry's portrayal of wind farms as "parks" in order to trick their way into unspoiled countryside in "green" disguise. Wind farms are more like highways, industrial buildings, railways and factory farms. Often, the most favorable locations for wind farms also happen to be the current location of particularly spectacular views in relatively unspoiled areas. Wind farms that produce only a fraction of the energy of a conventional power plant require 100 times the acreage. For instance:
Two of the biggest wind "farms" in Europe have 159 turbines and cover thousands of acres; but together they take a year to produce less than four days' output from a single 2,000 MW conventional power station - which takes up 100 times fewer acres.
A proposed wind farm off the Massachusetts coast would produce only 450 MW of power but require 130 towers and more than 24 square miles of ocean.
A wind farm occupying 192,000 acres - 300 square miles - would produce the same amount of energy as a 1000 MW nuclear plant (which has less than 1700 acres, or 2.65 square miles, within its security perimeter fence), or as a 1000 MW coal powered plant taking up 1950 acres, 3.05 square miles, for all of its associated infrastructure.
In addition, regular wind-tower maintenance increase requires miles of paved roads which causes increased runoff and decreased soil absorption of moisture. The impact on wildlife habitat is often greater than technologies associated with conventional fossil fuels.
Wind Power Promises: More tax revenue, more jobs, better farm economy. Wind power proponents often argue that new wind farms will improve the farm economy, increase tax revenues and produce jobs. Research indicates that the fiscal and employment benefits which occur will be less than promised and will come at a high cost - indeed there will be a net cost.
For instance, wind advocates in:
New Mexico wind power developer's have promised $450,000 in payments in lieu of taxes, $550,000 in land rental payments, and $500,000 in compensation for 12 employees who will operate the "wind farm" when completed.
But, the annual total of $1.5 million is claimed "economic benefits" is equal to about 12.6% of the $11.88 million in EXTRA costs loaded on electric customers each year if the full, true costs of the electricity from the "wind farm" were only $0.02 per kWh above the cost of electricity from other sources (i.e., 594,206,000 kWh x $0.02 per kWh = $11,884,120).
In North and South Dakota, farmer's could reap as much as $2,400,000 (approximately $5,000 per MW of turbine capacity), which might employ 6 full time workers at, let us say, a generous $100,000 per worker - an additional $600,000 per year and associated tax revenue. However, if wind power costs only $0.02 cents per kilowatt-hour (kWh) more than electricity produced from other energy sources - which is a low estimate of the additional costs - then the total extra annual cost of the electricity produced by the wind turbines at an average capacity factor of 30% $25,228,400. That amounts to a net cost to ND/SD residents of more than $ 23,000,000 per year.
In Washington State, the Kittitas Valley Wind project when completed would add $14,892,000 per year to the annual cost of electricity to energy consumers, and due to the production tax credit cost U..S. taxpayers $13,402,800 per year. However it will only provide the State of Washington's farmers with an estimated $750,000 per year in rents, projected construction employment (for 6 months) of $3,120,000 and full time employment of about $332,000 per year (an estimated 8 permanent employees at $20.00 per hr).
I have similar analysis on proposed wind projects in Virginia, West Virginia, New York and Illinois. In none of these cases do the net revenues exceed more than 1/5 of the net costs.
Comparing Wind Subsidies and Taxes to Conventional Fuels. Wind proponents often complain that it is unfair to single out tax credits and other forms of subsidies to their industry, or too renewable fuels in general, for attack, since, they argue, the fossil fuel industry receives subsidies as well. This is true as far as it goes, and, of course at the NCPA we argue for an end to subsidies for all forms of fuel - allowing the market to decide energy winners and losers. Whatever one thinks of subsidies, however, the truth is that the fossil fuel industry receives far less in subsidies per BTU equivalent than renewable fuels, and far less overall than they pay in excise taxes, income taxes, royalties and other fees or taxes. At more than $101 billion, the oil and gas industry pays 40 times more in royalties and taxes than the subsidies that it receives (a total of about $2.4 billion - which includes $.8 billion for the Low Income Heating Energy Assistance Program).
While fossil fuels combined, leaving out LEHEAP, do receive slightly more in subsidies in absolute dollars than renewables (excluding hydropower) combined ($1.6 billion vs. $1.1 billion), per unit of energy produced renewables receive more than 3 times the amount of subsidies that fossil fuels receive ($308 million per quadrillion BTU vs. 92 million per QBTU). And, unlike fossil fuels, renewables do not produce more in tax or income revenues than the subsidies that they receive.
Conclusion. Wind power is expensive, doesn't deliver the environmental benefits it promises and imposes substantial environmental costs. Accordingly, it does not merit continued government promotion or funding. Wind power blows!
The author owes much to Glenn R. Schleede, of Energy Market and Policy Analysis, Inc. Much of the cost data in this presentation comes from his pioneering work on the cost to various states of wind power projects.
H. Sterling Burnett, Ph.D.