NCPA - National Center for Policy Analysis

Wind and Solar Power Production

January 23, 2012

Though wind and solar energy have received enormous government subsidies for years, each remains relatively insignificant in terms of its contribution to aggregate energy production.  The low market share of these forms of energy speaks to the fact that the necessary technology for efficient implementation does not yet exist, and that advocates are essentially swimming against the market current, says Benjamin Zycher, a visiting scholar at the American Enterprise Institute.

  • Renewable electricity generation from all nonhydroelectric sources was only 3.6 percent of total U.S. generation in 2010.
  • Despite this small energy share, nonhydroelectric production received 53.5 percent of all federal financial support for the electric power.
  • Wind power alone, providing 2.3 percent of generation, received 42 percent of such support.

Wind and solar renewable energy have failed to take off despite government support because they face substantial market impediments.  First, their energy production is relatively concentrated and requires as a result large amounts of land per unit of energy.

  • A wind farm with a theoretical generation capacity of 1,000 megawatts (MW) and a generous generation capacity of 35 percent would require 144,000-192,000 acres.
  • The land requirement problem for solar thermal facilities is of sufficient importance because most analyses assume a maximum generation capacity of 50-100 MW, which, conservatively, would require approximately 1,250 acres.
  • In contrast, a 1,000 MW gas-fired plant requires about 10-15 acres; conventional coal, natural gas, and nuclear plants have capacity factors of 85-90 percent.

Wind and solar energy also face a broader geographic challenge.  Because they're located primarily in the Midwest and the Southwest, respectively, they are far from the coasts where most electricity is consumed.  This creates significant transmission costs.  One survey of 40 transmission studies for wind projects conducted from 2001 to 2008 finds a median transmission cost of $15 per megawatt hour.

These forms of energy face additional market obstacles as well, such as challenges to industry-wide economies of scale and inconsistent production.  For these reasons, the total market has not embraced wind and solar.

Source: Benjamin Zycher, "Wind and Solar Power, Part I: Uncooperative Reality," American Enterprise Institute January 17, 2012.

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