Recently the media reported wind and solar are competitive with coal and natural gas for generating electricity. The Wall Street Journal published an article “Economic impact of wind farms is changing the political dynamics of renewable energy”.

It is of major importance to understand, financial entities, such as Bloomberg and Lazard, hype wind and solar, because they want to promote their financial management services for high-net-worth investors, who are looking to shelter their incomes from taxation and look green at the same time; a win-win for all.

Bloomberg and Lazard, et al., to promote their tax shelter business, issue self-serving reports with rosy numbers about wind and solar to entice those investors, and boast about the various subsidies that would make projects pay. Here is a partial list:

 

1) The federal and state investment tax credits, ITC; up front cash.

2) The federal and state income tax savings due to accelerated depreciation write-offs during the first 5 years.

3) The federal production tax credit, PTC, during the first 10 years.

 

Wind and Solar Subsidies a Boon for Multi-Millionaires: Warren Buffett, considered one of the outstanding investors of all-time, has stated: “On wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit”. Buffett has investments in multiple wind sites, as do many other multi-billion dollar entities. Buffett and his cohorts hire tax accountants/lawyers to refine the subsidy-milking art form, as well as PR pros and RE lobbyists to continually increase the milking, via higher RPS targets and renewed subsidy periods.

Wind Subsidies a Boon Foreign Companies: About 85% of renewable energy tax credits, grants and loan guarantees go to foreign companies, such as Iberdrola (Spain), Vestas (Denmark), Siemens (Germany). When the US embarks on offshore wind, foreign companies, as a minimum, likely would:

1) Provide the very large wind turbines, 5 - 10 MW

2) Perform most of the erection work, and

3) Provide future maintenance and replacement parts

4) Foreign companies have the already-built infrastructures and about 30 years of offshore experience

5) As part of world trade strategy, their governments want to push the US into a more expensive energy supply mode to make it even less competitive. The US trade deficit in goods was $752.5 billion in 2016. See URL.

http://www.windtaskforce.org/profiles/blogs/cop-21-world-renewable-...

Traditional Electricity Generators: Electricity generated by coal and gas power plants remains the lowest cost method for generating electricity, especially when the costs of 1) the variability and intermittency of wind and solar and 2) the grid expansion/augmentation are properly accounted for.

 

Existing coal and gas power plants have levelized costs of energy, LCOEs, of about 3.5 c/kWh, because their construction and financing costs have already been amortized. The LCOEs of new plants are higher, but still competitive with wind and solar, because of the low cost of plentiful, domestic coal and gas.

 

However, to be competitive the coal and gas plants have to operate at high capacity factors to maximize electricity. If their production is constrained by wind and solar, they become uneconomical.

US Wind and Solar Generation Was Minuscule in 2016:  Wind and solar have grown to become minor percentages of total US generation after about 20 years of subsidies. In below table, PV solar is utility-scale only. Small-scale PV solar (not reported to EIA) was 19.467 TWh, per NREL. CSP means concentrated solar power.

 

PV solar NREL = 100*19.467/(4079.079 + 19.467) = 0.47% of total generation (before the meter).

Total solar =100* 56.221/(4079.079 + 19.467) = 1.37% of total generation (before and after the meter). See table 1.

 

Table 1/2016 Gen.

 US

 Wind

PV solar

CSP

Total Gen.

PV solar

Total solar

Source

EIA

EIA

EIA

EIA

EIA + NREL

NREL

EIA + NREL

TWh fed to grid

4079.079

226.872

33.367

3.388

4098.546

19.467

56.221

% US generation

100

5.55

0.81

0.09

0.47

1.37

New England Wind and Solar Generation was Minuscule in 2016: Wind and solar have become minor percentages of total NE generation after about 20 years of subsidies. At end 2016, NE had the following installed wind turbine capacity: VT 119, ME 901, NH 185, MA 115, RI 52, CT 5 = 1377 MW, which required a capital cost of about $4.0 billion, including grid extension and augmentation, and required the destruction of about 100 miles of pristine ridge lines, plus building about 100 miles of 50-ft wide access roads.

http://awea.files.cms-plus.com/FileDownloads/4Q%202016%20State%20Bl...

 

The wind generation data are shown in table 1A. See ISO-NE URL. The 2014 CF is representative, because few MW was added during 2014, but the 2015 and 2016 CFs likely are low, because some of the added capacity was not in service for the full year.

 

NOTE: Wind generation would be about 100 x 3,162,544/(105,572,000) = 3.0% of total NE generation, at the representative CF = 0.262. See table 1A.

 

https://www.iso-ne.com/about/key-stats

https://www.iso-ne.com/about/key-stats/resource-mix

https://energy.gov/sites/prod/files/2016/08/f33/2015-Wind-Technolog...

https://apps2.eere.energy.gov/wind/windexchange/wind_installed_capa...

 

Table 1A/Year

Capacity

Added

Generation

CF

% of NE generation

 

MW

MW

MWh/y

 

 

2013

  836

 

1766000

0.241

 

2014

  846

10

1928000

0.262

 

2015

1038

192

2169000

0.239 

 

2016

1377

339

2519000

0.210

2.4

2016

1377

 

3162544

0.262

3.0

 

At end 2016, NE had 1918 MW of installed solar capacity. That MW includes “before the meter”, such as residential rooftop, and “after the meter”, such as wholesale market participants. In 2016, total solar generation would be about 1918 x 8766 x 0.140 = 2,353,846 MWh, or 2.2% of total NE generation, if all MW were in service for the full year. See URL and table 1B.

 

Generation of the best month in summer is about 4 times the worst month in winter; the ratio is 6/1 in Germany, 10/1 in the UK.

https://www.iso-ne.com/about/what-we-do/in-depth/solar-power-in-new...

 

Table 1B/Year

 Capacity

Generation

% of NE generation

2016

 Installed MW

MWh

 

NE Wind

 1377

 3,162,544

3.0

NE Solar

  1918

 2,353,846

2.2

 

Subsidies and Cost Shifting are the Lifeblood of Wind and Solar: The prices, c/kWh, of wind and solar power purchase agreements, PPAs, are significantly reduced, mostly due to the various subsidies and cost shifting of 1) variability and intermittency, 2) grid enhancement and 3) storage onto the general public.

 

Studies comparing LCOEs of wind and solar plants with traditional plants are flawed, if:

 

- The various subsidies and the cost shifting are not properly accounted for.

- Useful service lives are assumed too long for wind and solar and too short for traditional plants.

- Capacity factors, CFs, are assumed too high for wind and solar and too low for traditional plants.

 

Various Subsidies for Wind and Solar: Because of the various subsidies, taxpayers and rate payers are forced to pay 1) higher monthly electricity bills, 2) higher prices for goods and services, and 2) taxes to finance various subsidies for wind, solar and other RE producers. Here is a partial list:

 

- The federal ITC, 30% of the qualified portion of the turnkey capital cost. The federal ITC is an upfront, tax credit that can be applied against any of owner’s taxes.

- The state ITC, usually a percentage of the federal ITC. The state ITC is an upfront, tax credit that can be applied against any of owner’s taxes.

- The federal production tax credit, PTC, of 2.4 c/kWh for the first 10 years of operation, a subsidy of 2.4/5 = 48% of the US average wholesale price. No wonder owners are crowing about underbidding traditional generating plants. For example, in areas with good winds, low construction costs and low operation and maintenance costs (Texas, Great Plains), if an owner’s cost is 7.3 c/kWh and he deducts 2.4 c/kWh as PTC, then his bid price could be 4.9 c/kWh, which is sufficient to get the contract, in most cases, and “competitive” with traditional plants. 

- The federal and state tax savings due to rapid depreciation write-offs in about 5 to 6 years, much more rapid than normal utility equipment write-off schedules of 10 to 20 years. Having tax savings earlier, instead of later, is financially more advantageous.

- The exemption of equipment purchases from the state sales tax and from the education property tax.

- Selling wind electricity at generous feed in tariffs of about 9 - 10 c/kWh in areas with high capital costs and low capacity factors (CFs), such as New England.

- Selling solar electricity at generous feed in tariffs of about 13.5 - 14.5 c/kWh in areas with high capital costs and low capacity factors, such as New England.

- Selling renewable energy credits, RECs, which lower the utility purchased RE energy cost by up to 50%.

- Loan guarantees by the federal and state government, which lower the interest rate of the funds borrowed from private entities, because the federal and state government assume the risk of the loans.

 

NOTE:

Wind ITC and Wind PTC decrease in 2017, 2018, 2019, and expire in 2020.

Solar ITC decreases in 2020, 2021, and expires in 2022.

True Cost of Wind Electricity: Typically, the cost of wind electricity, $/MWh, is stated in the power purchase agreement, which does not mention the burden of subsidies on others. If people realized the full cost of wind electricity, they would be less willing to foot the bill, because it is much more than people are led to believe.  

 

The cost of wind electricity, $/MWh, should include the levelized cost items in table 2. Items 1 and 2 are born by owners, items 3 and 4 are charged in various ways to the general public. The true cost is significantly higher than the cost mentioned in PPAs and in the media. See table 2.

 

- Areas with low levelized capital cost/MWh, low O&M cost/MWh, and good winds (high CFs) have low costs/MWh, such as Texas and the Great Plains.

- Areas with high levelized capital cost/MWh, high O&M cost/MWh, and low-to-medium winds (medium CFs) have high costs/MWh, such as New England.

 

Example of Cost Shifting to Ratepayers and Taxpayers in Texas: In 2013, Texas completed its Competitive Renewable Energy Zone project, adding over 3,600 miles of transmission lines to remote wind systems, costing state ratepayers and taxpayers $7 billion, i.e., not charged to owners, who crow about being so competitive. But that is not all. The lines have transmission losses and require O&M, and periotic refurbishment. All that is also not charged to owners, because their electricity generation is measured at the wind turbine, which could be 1000 miles from the end user.

 

High CFs in Windy Locations Will Become Scarcer: Current wind systems are mainly built in the Great Plains and Texas (low levelized capital cost/MWh, low O&M cost/MWh) with prime wind resources (high CFs), usually far from population centers (high grid enhancement cost/MWh).

 

Owners will eventually expand to sub-prime locations that may be hilly or offshore or further from population centers. As a minimum, this would require additional grid build-outs to transmit electricity to population centers. See table 2 and URLs.

 

http://www.windtaskforce.org/profiles/blogs/a-very-expensive-offsho...

http://www.windtaskforce.org/profiles/blogs/the-reality-of-wind-ene...

https://emp.lbl.gov/sites/default/files/2016_wind_technologies_mark...

 

 

Table 2/Location

Texas

Great Plains

New England

New England

 

 

Onshore

Onshore

Onshore

Offshore

 

Capital/MWh

Low

Low

High

Very high

 

O & M/MWh

Low

Low

High

Very high

 

CF

High

Very high

Medium

High

 

2016 conditions

 $/MWh

$/MWh

$/MWh

$/MWh

1

Capital, with grid connection

 61

46

80

150

2

O & M

9

8

18

40

 

Less PTC

24

24

-

-

 

PPA price, subsidized; see note

46

30

98

190

3

Variability, intermittency

 6

6

8

8

4

Grid enhancements, storage

12

12

15

15

 

True total cost; subsidized

64

48

121

213

 

True cost/PPA price

39% higher

60% higher

22% higher

12% higher

 

NOTE: 

- The PPA price is low because of subsidies. 

- In Vermont, the utility sells the wind RECs for about 3 c/kWh to reduce the PPA price.

 

The wind electricity would need to be sold to utilities at much higher prices, if:

 

1) The upfront ITCs, PTC and RECs, and other subsidies were repealed, and if the cost shifting of:

2) Variability and intermittency

3) Grid enhancement and expansion

4) Storage systems

5) The write-off period would be a more normal 15 years (for capital equipment), instead of an extremely generous 5 years

 

High Cost of Wind Electricity in Vermont: Vermont, an area with high levelized capital cost/MWh, high O&M cost/MWh, and low-medium winds (medium CFs), on 2000-ft high ridgelines, has high costs/MWh. See table 3. The table shows the subsidized PPA price and excludes the variability and intermittency cost and the grid enhancement and expansion cost.

http://www.windtaskforce.org/profiles/blogs/vermont-speed-renewable...

 

Table 3/Name

Capacity

PPA price, subsidized

MW

$/MWh

Deerfield

30

88

Georgia Mountain

10

100

Kingdom Community

63

95

Searsburg

  6

100

Sheffield

40

100

Total

143

 

More Wind Means Higher Household Electricity Rates: As traditional plants are closed down and wind systems are built out to take their place, we are left with an electrical system that would have high costs/MWh, and would be less reliable, and less resilient, and would be less capable of meeting demand, 24/7/365, without:

 

- Major upgrades and build-outs of transmissions systems.

- Increased utility-scale energy storage systems (at present very expensive) to cover wind lulls and seasonal variations.

- Increased supply/demand management systems.

 

More Wind and Solar = High Household Electric rates: In Europe, Denmark and Germany, leaders in wind and solar, have been dealing with above issues for several decades. Their expensive solutions have led to their households having the highest electric rates in Europe, about 30 eurocent/kWh. France, 80% nuclear, has one of the lowest, about 15 eurocent/kWh. See revealing household electric rate graphs in both URLs.

 

http://www.windtaskforce.org/profiles/blogs/german-renewable-energy...

https://wattsupwiththat.com/2017/10/19/doe-secretary-rick-perry-res...

 

Deficiencies of Wind and Solar: To compare LCOEs and PPA pricing of wind and solar with traditional plants is beyond rational, because wind and solar cannot be base-loaded and are not dispatchable. In fact, they could not even exist on the grid without the support services of the traditional generators (gas, coal, nuclear, hydro, bio):

 

- Most of which can be base-loaded and/or can be dispatchable.

- All of which provide grid-stabilizing, synchronous rotational inertia (wind has near-zero, and solar has none).

- Most of which can perform the required peaking, filling-in and balancing, 24/7/365, when wind and solar are insufficient to meet demand.

 

Also, with increased build-outs of wind and solar, robust connections to other grids and energy storage would be required to cover multi-day wind lulls and lack of sun (at night and winter) and seasonal variations. See URLs.

 

http://www.windtaskforce.org/profiles/blogs/german-renewable-energy...

http://www.windtaskforce.org/profiles/blogs/wind-and-solar-energy-l...

 

Reducing Grid Disturbances due to Wind and Solar: In the future, there will be many PV solar systems tied to a distribution grid. Increasing the capacity, MW, of those PV solar systems would decrease the stability of the distribution grid, especially during variable-cloudy weather.

 

Wind is notoriously variable 24/7/365, as its speed and direction is constantly changing. This is especially the case on NE 2000-ft. high ridgelines. Each wind turbines operates at a varying speed, which affects the stability of its voltage, frequency, and reactive power factor. Wind turbine plants, usually having negative reactive power factors, take reactive energy from the grid, which reduces stability. The combined output of 10 or 20 wind turbines fed, via a substation, into the high voltage grid would be “fuzzy”, in non-technical terms.

 

In case of the Vermont Lowell Mountain wind turbine plant, 63 MW, the “fuzziness” (the deviations outside required frequency and voltage ranges, and the varying, negative reactive power factors) was too excessive for the grid operator, ISO-NE, to allow the electricity to be fed into the grid.

 

GMP, the owner, was ordered to curtail output and to install a $10.5 million, 62-ton, synchronous-condenser system*, which took over one year, to provide 1) the required stability of the voltage and frequency, and a steady, positive reactive power factor (providing reactive power to the grid increases stability), and 2) synchronous rotational inertia (which adds to grid stability), as do all other traditional plants.

 

* Total capital cost to connect to the grid was about $20 million, including the synchronous-condenser system. The cancelled 60 MW Seneca wind turbine plant, proposed to be located nearby, would have required about $86 million to connect to the grid.

 

Battery Systems for Stabilizing Grids and Energy Storage: Some wind systems use large-scale battery systems for “smoothing” (taking out the fuzziness). Using the battery systems for energy shifting storage would be uneconomical, except in special cases, such as for grids on remote islands. See URLs.

 

http://www.windtaskforce.org/profiles/blogs/economics-of-batteries-...

http://www.windtaskforce.org/profiles/blogs/batteries-for-solar-ene...

http://www.windtaskforce.org/profiles/blogs/tesla-powerwall-2-0-for...

http://www.windtaskforce.org/profiles/blogs/solar-energy-does-not-r...

 

Wind Dependent on Traditional Generators: Wind (and solar) could not exist on the grid without the support services of the traditional generators (gas, coal, nuclear, hydro, bio), which provide grid-stabilizing, synchronous rotational inertia (wind has near zero, and solar has none) and perform the peaking, filling-in and balancing, 24/7/365, when wind and solar are insufficient to meet demand. With increased wind and solar, connections to other grids and energy storage also would be required to cover multi-day wind lulls and lack of sun (at night and winter) and seasonal variations.

 

That means these generators need to 1) more frequently start/stop, 2) operate at part load, 3) and ramp up/down, which increases fuel/kWh, CO2/kWh, and wear and tear/kWh. The amount by which the wind CO2 reduction is offset due to these inefficiencies ranges from 20% to 50% in areas with higher wind penetration, such as Texas, Ireland, etc.

 

That means one wind MWh displaces one traditional MWh, but that inefficiently generated, traditional MWh had 20% to 50% more CO2 than it would without wind. See URL.

http://www.windtaskforce.org/profiles/blogs/fuel-and-co2-reductions...

 

In addition, the traditional plants provide synchronous rotational inertia, which is necessary for grid stability. However, their economic viability (having to produce less MWh, and in an inefficient manner) is threatened by wind subsidies.

 

The various subsidies encourage wind plant owners to produce electricity even when wholesale prices are low (they are allowed to do this because of preferential access to the grid, whereas the traditional plants are ordered to reduce output by the grid operator), thereby flooding the grid with heavily subsidized electricity, driving down wholesale prices (not ratepayer electric rates) even lower. That makes it uneconomical for traditional plants to stay in business.

 

Measures to Increase Reliability and Resiliency: It will be necessary to implemented a national rule, before the coming winter heating season, so that eligible power plants will be able to participate in a rate structure that allows the owner to recover its “fully allocated costs” plus a “fair return on equity”, to maintain the reliability and resiliency of the US electricity system.

 

Germany, with a higher wind and solar percent than the US, already has implemented such a rule in the form of capacity payments for designated plants a few years ago. See URLs.

 

NOTE: Dominion Energy closed down the Kewaunee Nuclear Plant in Wisconsin and the Yankee Nuclear Plant in Vermont and blamed the artificially low prices caused by various subsidies, such as the PTC, as one of the reasons.

 

http://www.windtaskforce.org/profiles/blogs/german-renewable-energy...

http://www.windtaskforce.org/profiles/blogs/wind-and-solar-energy-l...

https://wattsupwiththat.com/2017/10/19/doe-secretary-rick-perry-res...

 

 

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Maine Center For Public Interest Reporting – Three Part Series: A CRITICAL LOOK AT MAINE’S WIND ACT (excerpts) From Part 1 – On Maine’s Wind Law “Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine if the law’s goals were met." . – Maine Center for Public Interest Reporting, August 2010  http://www.pinetreewatchdog.org/wind-power-bandwagon-hits-bumps-in-the-road-3/From Part 2 – On Wind and Oil Yet using wind energy doesn’t lower dependence on imported foreign oil. That’s because the majority of imported oil in Maine is used for heating and transportation. And switching our dependence from foreign oil to Maine-produced electricity isn’t likely to happen very soon, says Bartlett. “Right now, people can’t switch to electric cars and heating – if they did, we’d be in trouble.” So was one of the fundamental premises of the task force false, or at least misleading?"  http://www.pinetreewatchdog.org/wind-swept-task-force-set-the-rules/From Part 3 – On Wind-Required New Transmission Lines Finally, the building of enormous, high-voltage transmission lines that the regional electricity system operator says are required to move substantial amounts of wind power to markets south of Maine was never even discussed by the task force – an omission that Mills said will come to haunt the state.“If you try to put 2,500 or 3,000 megawatts in northern or eastern Maine – oh, my god, try to build the transmission!” said Mills. “It’s not just the towers, it’s the lines – that’s when I begin to think that the goal is a little farfetched.” http://www.pinetreewatchdog.org/flaws-in-bill-like-skating-with-dull-skates/

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