The Multiple Distortions of Wind Subsidies (Wall Street Journal)

The Multiple Distortions of Wind Subsidies

Producers get so much from the government that they can pay utilities to take their power and still make a profit.

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Federal subsidies for new wind-power generation will end on Dec. 31 unless they are renewed by Congress. For the sake of our economy and the smooth operation of the energy market, Congress should let the subsidies lapse. They waste taxpayer money, subvert the allocation of capital, and generate a social cost many times the price tag of the subsides themselves.


Since 1992, the federal government has expended almost $24 billion to encourage investment in wind power through direct spending, tax breaks, R&D, loan guarantees and other federal support of electric power. The Joint Committee on Taxation estimates that a one-year extension of existing federal subsidies for wind power would cost taxpayers almost $12 billion.


The costs of wind subsidies are extraordinarily high—$52.48 per one million watt hours generated, according to the U.S. Energy Information Administration. By contrast, the subsidies for generating the same amount of electricity from nuclear power are $3.10, from hydropower 84 cents, from coal 64 cents, and from natural gas 63 cents.


In addition, wind power benefits from federal mandates requiring the use of renewable energy by federal agencies along with preferential treatment by the Bureau of Land Management and the U.S. Forest Service. Many states provide additional tax breaks, subsidies and mandates for wind power. The total value of these additional subsidies has never been calculated.


But the cost to taxpayers is only part of the problem. Subsidized, wind-generated electricity is displacing other, much cheaper sources of power. The subsidies are so high that wind-power producers can pay utilities to take the electricity they produce and still make a profit. Such "negative pricing" has occurred for some time in the Midwest, the Pacific Northwest and in Texas—and, according to the Energy Information Administration, it will likely grow.

Bloomberg News

In West Texas, where wind power is a larger percentage of total electricity production than in any other part of the country, negative energy-price distortions have occurred 8% or more of the time for the last five years. Donna Nelson, the chairman of the Texas Public Utility Commission, warned in September that the market distortion caused by negative prices "makes it difficult for other generation types to recover their cost and discourages investment in new generation."


The net result is that federal subsidies are triggering an inefficient and costly transformation of grid resources from low-cost megawatts to high-cost "maybe" watts—electricity generated only when the wind blows.


When electricity demand peaked in Chicago on July 6, 2012, wind energy, which comprised 2,700 megawatts of capacity, was able to supply only four megawatts of electricity, a stunning 99.8% failure rate. In Europe, one day this February wind power produced almost a third of Germany's electricity—but four days later it produced none (it was a still day).


Power grids that rely on wind-generated electricity have to maintain redundant, backup generating capacity in case the wind isn't blowing and the demand for electricity is high. Many of these backup sources, such as coal and gas-fired plants, have to be kept up and running to be available when they are needed—even if they are not used. This partially offsets the environmental benefits of wind power.


Wind-power is an ancient technology—a Greek mathematician, Heron of Alexandria, is generally credited with building the first windmill 2,000 years ago. Charles Brush, an industrialist, was the first to generate electricity from a windmill in this country in Cleveland almost 125 years ago. But it never proved to be commercially viable.

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Comment by Long Islander on December 30, 2012 at 6:00am

And yet one more:

Let’s Be Gone With the Wind 
Why subsidize an industry that kills millions of birds and has no environmental benefit?

By John Fund

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John Fund 

President Obama likes to talk about making sure “the biggest corporations pay their fair share.” Treasury secretary Tim Geithner calls for tax reform to close loopholes and subsidies. Budget hawks say federal spending must be curbed. Congress and federal environmental regulators claim they are doing everything they can to save endangered species. By doing nothing and waiting for December 31 to pass, all of those folks could strike a blow in support of each of these policies. All they have to do is let the federal production tax credit (PTC) for wind energy expire on schedule this coming Monday.

Begun 20 years ago to spur the construction of wind-energy facilities that could compete with conventional fossil-fuel power plants, the tax credit gives wind an advantage over all other energy producers. But it has mostly benefited conventional nuclear and fossil-fuel-fired electricity producers. The biggest user of the tax credit is Florida-based NextEra Energy, the nation’s eighth-largest power producer. Through skillful manipulation of the credits, NextEra from 2005 to 2009 “paid just $88 million in taxes on earnings of nearly $7 billion,” Businessweek reports. That’s a tax rate of just 1.25 percent over that period, when the statutory rate is 35 percent.

Wind power has had two decades to prove itself with federal subsidies. Last year, wind power represented a third of all new electric-generating capacity, because taxpayers foot the bill for more than half of wind power’s cost. In addition, lobbyists for wind power have convinced 30 states to set mandates  requiring that a certain percentage of electricity come from renewable sources — which guarantees the wind industry a market.

The subsidies directed toward wind dwarf the subsidies of other energy sectors. Robert Bryce, energy analyst for the Manhattan Institute and an NRO contributor, reports that subsidies to wind are “at least twelve times greater than those provided to the oil and gas sector and 6.5 times greater than those provided to the nuclear industry,” on a per-unit-of-energy-produced basis.

But no matter how much money is blown its way, wind power — for simple scientific reasons — can’t graduate to the kind of large-scale, reliable energy production that its backers tout. Physicist and environmentalist John Droz Jr. notes: “There is no real environmental benefit to wind, because a) it’s an unpredictable commodity, b) output from any group of wind projects can and will go to zero on many occasions, and c) energy generated from industrial wind power cannot be economically stored.” Germany, which has gone stark raving mad in building wind turbines, has proven just how unreliable it is. On one day this February, wind power delivered a third of Germany’s electricity needs, but four days later, on a still day, it contributed precisely zero.

Then there is the carnage inflicted on Mother Nature. Paul Driessen reported in theWashington Times that “the U.S. Fish and Wildlife Service estimates that wind turbines kill 440,000 bald and golden eagles, hawks, falcons, owls, cranes, egrets, geese, and other birds every year in the U.S., along with countless insect-eating bats.” The actual numbers are probably far higher. The turbine blades of the nation’s 39,000 windmills move at 100 to 200 miles per hour and can mow down anything that gets in their path.

Over the past 25 years, an estimated 2,300 golden eagles have been killed by turbines at Altamont Pass, Calif., alone, leading to an 80 percent drop in the golden-eagle population of southern California.

Sadly, many Republicans have climbed on board the carnival train for wind fans. Karl Rove continued the former Bush administration’s defense of the federal wind tax credit at this year’s American Wind Energy Association convention. He was joined on stage by former Obama White House press secretary Robert Gibbs. Three leading Senate Republicans — Charles Grassley of Iowa, Lisa Murkowski of Alaska, and Pat Roberts of Kansas — were furious last August after Mitt Romney came out in favor of ending federal largesse for wind energy. All three senators oppose even the most modest of cuts in the PTC.

Continue reading here.

Fair Use Notice: This website may reproduce or have links to copyrighted material the use of which has not been expressly authorized by the copyright owner. We make such material available, without profit, as part of our efforts to advance understanding of environmental, economic, scientific, and related issues. It is our understanding that this constitutes a "fair use" of any such copyrighted material as provided by law. If you wish to use copyrighted material from this site for purposes that go beyond "fair use," you must obtain permission from the copyright owner.

Comment by Long Islander on December 30, 2012 at 5:53am

Another good article:

Save the Bald Eagle, $55 Billion

11:05 AM, DEC 28, 2012 • BY JEFFREY H. ANDERSON

It’s symbolically appropriate that one of President Obama’s preferred forms of “green energy” crony capitalism has the effect of killing off the national bird. The federal wind production tax credit (PTC) is mercifully set to expire on New Year’s Eve.  The PTC provides a financial boon, at great taxpayer expense, to well-connected companies that build eyesore wind farms that kill great birds of prey and pretty much anything else that flies within the range of their “green” blades.  The nonpartisan Institute for Energy Research estimates that if this cozy arrangement between big government and big business were to be extended, it would cost American taxpayers $55,000,000,000.  The fate of the PTC — and of that $55 billion— now rests with House Republicans, who would have to approve the PTC’s renewal.

As John Fund writes today at National Review Online:

“[N]o matter how much money is blown its way, wind power — for simple scientific reasons — can’t graduate to the kind of large-scale, reliable energy production that its backers tout. Physicist and environmentalist John Droz Jr. notes: ‘There is no real environmental benefit to wind, because a) it’s an unpredictable commodity, b) output from any group of wind projects can and will go to zero on many occasions, and c) energy generated from industrial wind power cannot be economically stored.’ Germany, which has gone stark raving mad in building wind turbines, has proven just how unreliable it is. On one day this February, wind power delivered a third of Germany’s electricity needs, but four days later, on a still day, it contributed precisely zero.”

Fund adds:

“Then there is the carnage inflicted on Mother Nature. Paul Driessen reported in the Washington Timesthat ‘the U.S. Fish and Wildlife Service estimates that wind turbines kill 440,000 bald and golden eagles, hawks, falcons, owls, cranes, egrets, geese, and other birds every year in the U.S., along with countless insect-eating bats.’  The actual numbers are probably far higher. The turbine blades of the nation’s 39,000 windmills move at 100 to 200 miles per hour and can mow down anything that gets in their path.

“Over the past 25 years, an estimated 2,300 golden eagles have been killed by turbines at Altamont Pass, Calif., alone, leading to an 80 percent drop in the golden-eagle population of southern California.”

To continue reading click here.

Fair Use Notice: This website may reproduce or have links to copyrighted material the use of which has not been expressly authorized by the copyright owner. We make such material available, without profit, as part of our efforts to advance understanding of environmental, economic, scientific, and related issues. It is our understanding that this constitutes a "fair use" of any such copyrighted material as provided by law. If you wish to use copyrighted material from this site for purposes that go beyond "fair use," you must obtain permission from the copyright owner.

Comment by Brad Blake on December 29, 2012 at 10:32pm
When the government picks winners & losers, it makes losers out of all of us. Get the damned government out of energy production and the free market will flourish. This would never happen in a competetive free market!

 

Maine as Third World Country:

CMP Transmission Rate Skyrockets 19.6% Due to Wind Power

 

Click here to read how the Maine ratepayer has been sold down the river by the Angus King cabal.

Maine Center For Public Interest Reporting – Three Part Series: A CRITICAL LOOK AT MAINE’S WIND ACT

******** IF LINKS BELOW DON'T WORK, GOOGLE THEM*********

(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 https://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?" https://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.” https://www.pinetreewatchdog.org/flaws-in-bill-like-skating-with-dull-skates/

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Hannah Pingree on the Maine expedited wind law

Hannah Pingree - Director of Maine's Office of Innovation and the Future

"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."

https://pinetreewatch.org/wind-power-bandwagon-hits-bumps-in-the-road-3/

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