American Elephants


Wind Power May Be The Greatest Scam of Our Age. by The Elephant's Child

The wind power industry is in a panic. The deal to renew a tax credit failed on Thursday in Washington. This will have major ramifications where installations of wind projects are planned. Without the subsidy, wind goes out of business.

Christopher Booker points out the problems in Britain’s Daily Mail.  Governmental obsession with wind is an enormous political blunder. Under an agreement with the European Union, Britain is committed within ten years — at enormous expense — to generate nearly a third of its electricity from renewable sources. He lists 3 major reasons why it is a gigantic fraud:

  1. Promoters speak entirely about “capacity” which means the energy a turbine could produce if all conditions were perfect all the time. Doesn’t happen. Wind is, by its very nature, intermittent, and requires backup from a conventional power plant whenever the wind is not blowing. The expense of putting up wind farms gets an added, and uncounted, expense of building new conventional power plants.
  2. Wind is a preposterously expensive way to produce electricity. No one would dream of building wind turbines unless they were guaranteed a huge government subsidy. What other industry gets a public subsidy of 100% or 200% of the value of what it produces.
  3. The idea that the industry is somehow making a vital contribution to “saving the planet” by cutting our emissions of CO2 is a lie. The CO2 reduction achieved by wind turbines is so insignificant that one large windfarm saves considerably less in a year than is given off by one jumbo jet flying between Britain and America. That doesn’t count the CO2 emissions generated by the construction.

Aside from that, academic experts at Carnegie Mellon University in Pittsburgh say half of the turbines at four proposed offshore windfarms are likely to be destroyed by hurricanes in their 20-year life.  What?  Is their life expectancy only 20 years?

The proposed wind farms in Massachusetts, New Jersey , North Carolina and Texas could cost $175 million each, but researchers believe current designs of turbines mean many will not survive. In Europe, salt water damage has proved to be a big problem. Turbines can shut down during high winds, but can still buckle in hurricanes. Texas is the most dangerous of the places they studied.

Around the world, wind depends on government subsidy. If the subsidy is removed, the wind farms shut down. A sad comment on their economic viability.

The tax credit, which debuted in 1992, has a history of one- to two-year extensions and years in which it wasn’t extended at all. A bill tied to the American Recovery and Reinvestment Act of 2009 extended the program until the end of 2012.

Kevin Borgia, who heads the Illinois Wind Energy Coalition, said several years of stability for the tax credit helped drive down costs for wind generation. Without the tax credit, the market for wind power generation will grind to a halt, he predicts.

Paul Bowman, vice president of development at wind developer E.ON Climate and Renewables North America, which has its North American headquarters in Chicago, said his company had about $1 billion in construction planned for next year, tied to the tax credit extension.

Companies are laying off workers or planning layoffs. Some are looking to other countries for business. Germany has dozens of anti-wind power groups, and there are increasing numbers in Britain. The Dutch have lost interest. Spain is out except for the Canary Islands. It’s hard for governments who were so sure they had abundant clean green energy at hand to admit that they were only green dreams.

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22 Comments so far
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“… fell green dreams”?

Also, the energy tax credit is there partly to ensure that the projects can obtain financing, and to encourage the erection of turbines with higher capacity factors (i.e., good location, good maintenance). However, the actual marginal cost of electricity from a wind turbine, once it is installed, is low enough that most turbines will continue to generate power whether or not the subsidy is still there. So I would be very surprised to see more than a small share of the existing wind farms shut down.

What we would see is a halt to new construction, which is a different thing.

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Comment by Subsidy Eye

I have no idea what I meant by “fell green dreams” I was having a little trouble with this piece, a first attempt inadvertently got posted and I couldn’t find it. I think you commented. I thought I proofread it quite thoroughly, but apparently I didn’t. Embarrassing. Fixed.

In every country, for a number of years, if subsidies are removed, the wind farms go out of business. They do not and can not produce the energy claimed. But shutting down coal-fired power plants so that wind and solar are going to produce 30% of our energy — not going to happen.

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Comment by The Elephant's Child

No problem with the “fell green dreams” — the hardest thing is to proofread one’s own text. I was just curious what you meant to say.

I’m still confused by what you mean by, “In every country, for a number of years, if subsidies are removed, the wind farms go out of business.” Translation?

My only point is that the marginal cost of producing electricity from wind turbines is so low that somebody will still be using them as long as the price of electricity is covering their operating costs. Yes, some of the investors in existing wind parks will lose their shirts, but then somebody will scoop up the turbines at a bargain-basement price. Yank the subsidies and it will be years before the existing wind turbines are shut down permanently.

Do you have counter-evidence?

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Comment by Subsidy Eye

(I had no idea what I meant!) I’ve been reading about windpower for a long time, just because I’m interested. Over time, I’ve seem many articles saying that if the subsidies are removed, the wind farms shut down, permanently. The subsidies are significant — for wind it’s $23.37 per MwH. For solar, it’s about a dollar more. Compare to 25 cents for petroleum, or natural gas and 44 cents for coal. (O wants to remove the latter)

Where do you get the low marginal cost? Connecting to the grid is supposed to be more expensive and complicated than the installation. Offshore installation is hugely expensive, and salt water very damaging. Turbines need constant maintenance, and apparently have only a 20 year lifespan. They just don’t produce much energy either. Observers say they seldom see a wind farm where all or even most of the turbines are operating, and there doesn’t seem to be any plan for removing them when they die. I don’t understand your low marginal cost — each turbine has to have backup from a conventional plant 24/7 — wind is so intermittent that it’s on/off/on/off off off off. In one article on wind at MasterResource, they had a graph of the intermittency of the wind, and you could instantly grasp the problems. Periods of great calm are apt to come in particularly cold spells, or in hot weather when electricity is most needed. Sometimes the wind doesn’t blow for days. Henk Tennekes is supposed to be the world expert. Dutch. I think I have his name right.

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Comment by The Elephant's Child

EC, I’m not defending the subsidies. In many parts of the world, in any case, they are far too generous even to make up the difference, encouraging construction of wind parks in less windy areas than would occur if the subsidies were lower, resulting in lower capacity factors (MWh generated as a percentage of theoretical potential) than should be the case.

You keep changing the subject to make points about the marginal long-run levelized cost, which is what (should) determine investment decisions. I am talking about the marginal cost of producing power AFTER the turbines have been erected and connected to the grid. Then, the only cost of generating additional power — to the wind-turbine operator — is the cost of O&M. One big advantage for an existing wind turbine is that it incurs no fuel cost, obviously.

That some already-built wind turbines, especially those with high O&M costs (e.g., troublesome designs installed in remote areas), may be shut down once the production subsidy is withdrawn is probably true. But many will keep turning as long as prices received exceed O&M costs.

As for the intermittency problem, that is more problematic the more variable the wind resource and the larger the penetration of wind and other intermittent resources on the grid. One problem is that, thanks to clauses in many electricity systems that require utility operators to buy whatever power the wind turbines generate, the wind-turbine operators are not charged the cost of maintaining spinning reserve. If they were, then the economics of wind (and solar) power would look worse.

I don’t think we have a fundamental disagreement here. All I am saying is that, even if production subsidies are withdrawn, don’t expect all the EXISTING wind parks to shut down.

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Comment by Subsidy Eye

“The marginal cost of wind energy once a plant is constructed is usually less than 1 [U.S.] cent per kWh.”

http://en.wikipedia.org/wiki/Wind_power#Cost_trends

“For the first two years of its lifetime, a turbine is usually covered by the manufacturer’s warranty, so in the German study O&M costs made up a small percentage (2-3%) of total investment costs for these two years, corresponding to approximately 0.3-0.4 euro cents per kWh. After six years, the total O&M costs increased, constituting slightly less than 5% of total investment costs, which is equivalent to around 0.6-0.7 euro cents per kWh. These figures are fairly similar to the O&M costs calculated for newer Danish turbines.”

http://www.ewea.org/fileadmin/ewea_documents/documents/00_POLICY_document/Economics_of_Wind_Energy__March_2009_.pdf

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Comment by Subsidy Eye

Windy places are usually far removed from the grid, and hard to reach. The experts I listen to ( I’m not trying to be argumentative, just trying to grasp our differences) say, as I understand it, that the intermittency is such a big problem that it makes the whole installations fairly useless. What you are telling me sounds like it comes from the promoters, saying as soon as we get the initial cost paid for we’re home free? I don’t know how many turbines a single coal-fired power plant can support, because each turbine in a farm is going to be performing differently. Coal fired plants are not cheap, and hated by the Greens. But a lot of turbines are going to need a lot of power plants. You say the existing turbines involve no fuel costs — but I’m trying to point out that’s not true they involve multiple power plants for full-time backup.

Here is a piece from Henk Tennekes, and here is another from my research with more facts and numbers.

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Comment by The Elephant's Child

Again, your first sentence refers to the costs of adding new capacity, not the costs once the capacity is there. Your second sentence can be valid in some electricity systems, but the degree of the effect depends on a host of factors.

For a good, and in my view scrupulously neutral, study of the economics of wind power on one system (Ireland’s), have a look at this PhD thesis:

http://erc.ucd.ie/files/theses/Eleanor%20Denny%20-%20A%20Cost-Benefit%20Analysis%20of%20Wind%20Power.pdf

Its conclusions?

In order to investigate the costs and benefits of wind generation, it is necessary to analyse wind in the context of the power system within which it is installed. … In the worst case, wind generation expressed negative net benefits with penetrations of just 5% of electricity generation. Positive net benefits were experienced [with] up to 30% of electricity generated through wind in the best-case scenario.

I have checked a lot of sources, and the claim that marginal operating costs of on-land wind generation are less than 2 cents per kWh (the cost of gas-fired power) seems not to be controversial. For that kind of information, I think even the producer associations can be trusted.

That is different from the net benefit of the power to the system, however, and that’s where the question of the marginal cost of maintaining reserve capacity comes in. One study critical of wind power said it could be as high as 2 cents per kWh. If the price of electricity that wind-turbine operators is reduced by that amount, it certainly might put some out of business. But, again, the cost of this depends on factors that differ considerably across the world. The reason I questioned your claim was that it was so categorical:

Around the world, wind depends on government subsidy. If the subsidy is removed, the wind farms shut down.

It depends! It depends, for one, on whether the existing wind farms are covered by an obligation on the electricity grid to buy whatever power they produce. It depends on the level and quality of the wind power. It depends on whether there is a price put on SO2 and CO2 emissions. It depends on a lot of things. What I willing to bet real money on is that if all subsidies to wind power around the world were to be withdrawn, many wind turbines would continue to sell some power over the next decade.

I am not making a value judgement here, just trying to qualify your categorical remark.

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Comment by Subsidy Eye

You keep writing about “marginal cost” and I don’t know what you mean by it. You ignore the power plants that have to go on to support the wind generation on a minute by minute basis. There is no electricity from wind without the backup, You are really just running multiple power plants, and here and there you get a little bit that is actually generated by wind, and that wouldn’t be there unless required of utilities by government. It is not possible to turn on a light switch and expect that the lights would go on if you are connected solely to wind energy. Please read this piece from Master Resource, and if you are interested some of their other resources on wind.

You are thinking about wind on the basis of the farm and the “free” wind. Think about it at the other end of the energy deal. You want to turn on your lights or turn on a radio. A factory wants to turn on a machine. When they turn on the switch they expect energy in the form of electricity. As an analogy, imagine yourself back in the days when all light came from candles or a kerosene lamp, and your ability to turn on the light comes from your big box of kitchen matches. Yet only a few of the matches will actually successfully light, but you don’t know which ones, nor how many, Maybe 50, maybe none. You may at some point get some energy, but essentially there is no there there. You can’t depend on it, therefore it is useless. What you want is a box of butane lighters that you can depend on. With a wind farm, you may go for days and days without wind generation. You are not depending on the wind farm, you are de pending on the backup power stations. When the wind does kick in, you are not saving the energy from the conventional power plant.

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Comment by The Elephant's Child

One more time: read my lips. One can talk about marginal cost of the wind-turbine operator, and marginal value to the system separately. I acknowledge your point about the marginal cost to the system. What connects the two is the price of the electricity that is paid to the wind operators. And what determines that depends on the penetration of wind in the system (all else equal, a small amount of wind dispersed over areas with diverse wind resources will be easier to deal with than a large amount of wind concentrated in one area), and the nature and cost of load-following power. In a system with a lot of hydro-electric power (like Quebec), the cost of dealing with intermittency is a lot lower than in a system dominated by base-load coal-fired plants (like Wyoming).

You wrote:

Around the world, wind depends on government subsidy. If the subsidy is removed, the wind farms shut down.

In my view, that second sentence is too categorical. In the real world, because of differences in electricity systems, and differences in the contract conditions under which the wind parks operate.

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Comment by Subsidy Eye

(To finish my last sentence): In the real world, because of differences in electricity systems, and differences in the contract conditions under which the wind parks operate, one would see some wind turbines unable to sell their power for enough hours to remain solvent, with other ones still sending power to the grid, whether under the original ownership or that of another.

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Comment by Subsidy Eye

You didn’t read the article at Master Resource. Most of what I write is supported by other material to which I link, in order to keep my posts at a reasonable length. If you don’t read the links, you’re missing much of the argument. I am suggesting that, considering everything, the addition of wind to an electricity system is of no real value whatsoever. You have power plants that you have added to the system that must produce energy that has a cost. and that must run all the time. Adding occasional wind energy to that is just an extra, unnecessary cost — even if that cost is small — of value only to those who value the fact that that particular small amount of energy came from a source considered by environmentalists to be more pleasing because it is “natural.” If you don’t have the backup power stations, the wind is of no use because you can’t turn on a light switch and dependably get energy at all. It can’t be stored. It’s earrings on an elephant.

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Comment by The Elephant's Child

As I said, I acknowledge that the effect on electricity systems matters. But I did cite other material. (Did you read the Irish study?) Unfortunately, I cannot find published work that answers the question: what would happen in each electricity system around the world if all subsidies for wind power were ended? Do you know of such a study?

The Master Resource article is U.S.-focused, and the BENTEK study referenced pertains to the specific case of Colorado. I would be prepared to agree with the contention that “no utility companies would likely do this on their own” — i.e., invest in wind power.

But, encouraged by government policy, people have. And those investments can be considered sunk costs. Then the remaining question is, would the wind turbines have any value to an electric utility if they didn’t have to worry about covering the initial investment and grid-connection costs? I would maintain that in some systems the turbines would continue to have value. It depends on the share of intermittent power on that particular grid and the resources available to deal with that intermittency.

Your remark was categorical about ALL wind turbines shutting down all over the world. I do not believe that would happen.

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Comment by Subsidy Eye

Unfettered capitalism will always show you the truth, if you can build, maintain and make a profit then its ready for the big show. If not it should be shelved until better technology comes along. (Oh but nothing could be that simple) but that’s the great thing about capitalism it is that simple. (oh but they need subsidies to get started) what a laughable statement.

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Comment by hey_sherm

It’s true in Japan. Perhaps you are assuming that only the direct subsidy for power produced is removed. I am assuming that governments end the legislated requirement that X amount of a utility’s energy come from alternate sources. Utilities would drop the wind farms like the proverbial hot potatoes, and I think it will happen soon. The Netherlands has rejected wind. Britain is revolting though the government hasn’t given up yet. Germany has yanked their subsides for solar.

I did read, at least part of your 2007 Irish PhD thesis. She’s way too hooked on “capacity,” which though the figure may be correct, is essentially meaningless since “capacity” is never achieved. Wind turbines operate at only 20% efficiency. After decades of subsidies, wind provides only 1% of our energy. States are taking a look at how they are meeting their goals, and they are not even close. Wind energy is not economical, and without state requirements, which are “feel good” and “see how green we are” nonsense, they’d be done. If you have an investment in a wind farm, you’d be wise to sell.

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Comment by The Elephant's Child

Could we stick to the subject, please? You keep using your replies to interject irrelevant tirades against wind power. My comments are motivated by no particular viewpoint on the merits or not of wind.

You continue to throw in “the Netherlands has rejected wind”. Meaning what? They stopped using taxpayer money to subsidize the feed-in tariff, and so now (like most countries with special FITs for wind) it will make rate-payers shoulder the extra cost of the special tariff instead.

So, what if all subsidies AND renewable portfolio standards were ended. Would investments in new wind turbines grind to a halt? Yes. Would owners of many if not most wind parks (those not owned by the utility companies themselves) go bust? No doubt? But would all generation of electric power from wind turbines stop? I don’t think so. The turbines will still be standing, and the resources to deal with the intermittency of the power will have been built. If the marginal cost of producing the wind power avoids a higher cost to produce that power in the system, those turbines will still be used. Such situations exist in the world. You need to have solid evidence to the contrary before claiming that all wind power generation would cease everywhere.

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Comment by Subsidy Eye

I think you are completely and utterly mistaken, from 3rd paragraph, “But would all generation” on. I think you’re wrong about marginal cost. I don’t think your Irish PhD student was correct. She was operating from the idea of “capacity.” I don’t accept your idea of marginal cost, nothing I have seen anywhere suggests a low marginal cost. We disagree. I’m done.

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Comment by The Elephant's Child

I’m sorry you feel that way. I found the Irish study useful because of the number of factors it takes into consideration.

Let’s look at New Zealand, then. NZ has lots of hydro, which can load follow, but it has to balance out peak demands during the drier months with expensive thermal power. As this document (from a wind-energy org — sorry) admits, the wind capacity is not something that can be relied on.

http://windenergy.org.nz/documents/factsheets/Electricity.pdf

But the fluctuation in output can be handled by hydro, and the electricity is valued because it saves water, which is thereby available to produce power in the drier season, when they might otherwise rely on fossil fuels.

If I find a more independent study of NZ’s situation I’ll add it. In the mean time, I stand by my view that some existing turbines would still feed power to grids even in the absence of subsidies.

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Comment by Subsidy Eye

“Greatest scam of our age” After the 2008 bank driven global collapse and the war in Iraq I wonder what about that title

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Comment by hugh

Subsidy eye, PhD theses are not peer-reviewed, and by their very nature are works by ‘apprentice’ academics. They are not to be used to substantiate arguments.

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Comment by Jill

Reblogged this on Climatism and commented:
Bang on.

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Comment by Climatism

[…] Wind Power May Be The Greatest Scam of Our Age. […]

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Pingback by 14,000 Abandoned Wind Turbines Litter the United States |




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