Continuing its unending stream of columns bashing wind power, yesterday's Wall Street Journal opinion page included an article by Patrick Jenevein of Tang Energy, criticizing wind power and the federal tax credit that has been its primary incentive. Mr. Jenevein's column omits some key facts:
Wind power is already making revolutionary contributions to America's energy supply. Two states, Iowa and South Dakota, are now generating more than 20 percent of their electricity with wind, while nine topped 10 percent in 2012. In 2012, the U.S. wind industry passed a milestone, having cumulatively generated more electricity than could be generated by burning 1 billion barrels of oil–without using any fuel or emitting any air pollution or greenhouse gases.
Wind power costs are falling. Mr. Jenevein cherry-picks statistics to disguise this fact–the numbers he picks are from before and after the dramatic expansion of the Chinese economy, which drove global prices for all raw materials through the roof. Prior to that expansion, wind power cost had been declining, and since then, their decline has resumed. One recent authoritative study, from the International Energy Agency (IEA), addressed this point in detail:
"- Between 1980 and the early 2000s, significant reductions in capital cost and increases in performance had the combined effect of dramatically reducing the levelized cost of energy (LCOE) for onshore wind energy.
"- Beginning in about 2003 and continuing through the latter half of the past decade, wind power capital costs increased—driven by rising commodity and raw materials prices, increased labor costs, improved manufacturer profitability, and turbine upscaling—thus pushing wind’s LCOE upward in spite of continued performance improvements.
"- More recently, turbine prices have declined, but still have not returned to the historical lows observed earlier in the 2000s. At the same time, performance improvements have continued. As a result, modeling based on capital cost and performance assumptions from the United States and Denmark for projects expected to be built in 2012–2013 suggests that the LCOE of onshore wind energy is now at an all-time low within fixed wind resource classes, and particularly in low and medium wind speed areas. [emphasis added]
Wind power is saving consumers money today. Wind power saves consumers money because it costs very little to operate a wind farm, and wind turbines need no fuel. When the wind is blowing, utility system operators turn down, or turn off, the output from the most expensive power plants on the system to save on fuel costs. For example, here is what Joe Gardner, Executive Director of Real-Time Operations for the Midwest Independent System Operator (MISO), said recently about wind generation after it reached a peak of more than 10,000 MW on the MISO system:
“Wind represents one of the fuel choices that helps us manage congestion on the system and ultimately helps keep prices low for our customers and the end-use consumer. When we have significant quantities of wind being generated, we use less of other, more expensive, generation types to keep the system in balance."
Adding more wind power to the electric utility system could reduce wholesale market prices by more than 25 percent in the Midwest region by 2020, according to an analysis released in May 2012 by Synapse Energy Economics on behalf of Americans for a Clean Energy Grid. The report found that wind power could cut the wholesale price of power by $3 – $10 per megawatt hour (MWh) in the near term and up to nearly $50 per MWh by 2030. Those savings would be passed along to consumers through lowering retail electricity prices by $65-200 per household each year.
Wind power's tax incentive has been extraordinarily successful. Incentivizing domestic energy production makes economic sense, as access to affordable, homegrown energy is the lifeblood of our economy.
By focusing on wind incentives in isolation, Mr. Jenevein misses the big picture. Over the last 90 years, federal support for the fossil fuel industry has been far greater than for renewables. In fact, according to a study of historical incentives by the venture capital firm DBL Investors, the federal commitment to oil and gas was five times greater than for renewables during the first 15 years of each set of incentives. Government support totaling nearly $600 billion has been provided to bolster the production of conventional fossil energy sources, along with $73 billion for nuclear power, according to the Nuclear Energy Institute's own tally.
Wind power and its primary incentive, the Production Tax Credit (PTC), have been proven to be cost effective. The PTC has driven up to $25 billion a year in private investment, helping to create a manufacturing supply chain for the wind industry that spreads across 44 states. While wind developers now have the option to convert the PTC to an up-front investment tax credit (ITC), the ITC is still subject to recapture provisions in the event that a wind project fails to generate electricity.
Fact check: Debunking Howard Rich's errors on wind, March 28, 2013
Fact check: Sen. Alexander's claims about wind energy unfounded, March 27, 2013
Fact check: Heartland's Kaminsky misguided on wind incentives, April 19, 2012
Fact check: Heritage errs in supporting job-killing tax hike, December 19, 2011
Fact check: Globalwarming.org ignores energy incentive history, December 19, 2011
Fact check: Myhrvold off target on energy incentives, November 29, 2011