at the Citizen Power Alliance 2010 Wind Conference
Wind power costs in U.S. are six times higher than claimed
Many U.S. special interests are misrepresenting wind power costs, including the wind industry, environmental groups, utility monopolies, independent system operators, educational and research institutions, and even federal and state governments. On September 24, Bill Ritter, the current director of the Center for the New Energy Economy at Colorado State University and former Governor of Colorado, wrote in the Wall Street Journal that “Long-term contracts for wind energy are being signed by utilities in several states in the range of 3 cents per kWh over 20 years” (1). Xcel Energy, the nation’s leading wind-generating electric utility, declares “wind power is simply the cheapest resource” (2).
Before the overproduction of turbines led to recent dumping, developers were offering utilities (in the lowest-cost wind areas of the U.S.) bid prices of about four cents (3). But the price of electricity from windmills outside the U.S. has been about 10 cents (in the form of feed-in tariffs), with capital costs accounting for about 93 percent of total costs. The six cent difference in the U.S. can be explained by tax write-offs targeted to big companies and the rich that cover half to two-thirds of the capital costs of windmills, according to the wind developer web site Windustry (4). Michael Mendelsohn of the National Renewable Energy Laboratory explains that the federal production tax credit (PTC) and federal accelerated depreciation (MACRS) are worth about 30 percent and 20 to 25 percent of the capital costs of windmills, respectively.
The PTC is worth 2.2 cents after taxes or 3.7 cents before taxes at a 40 percent marginal tax rate (5). After compensating investors with a financing charge worth about 0.7 cents, the tax credit is worth about three cents to developers. A few years ago, wind developers were allowed to replace the PTC with an equivalent Investment Tax Credit (ITC) that directly reimbursed 30 percent of windmill costs over the first couple years. Many states also offer accelerated depreciation that mirrors MACRS. Since Bolinger found combined federal and state accelerated depreciation provided tax savings over six years comparable to the PTC for 10 years (6), accelerated depreciation can also be considered to be worth about three cents or 30 percent of windmill costs.
Even though wind power has been subsidized from 10 to three or four cents, electricity rates have been increasing significantly in regions with the highest wind penetration levels (five to 10 percent), due to extra transmission and integration costs (that have often not been accurately reported by utilities).
The Lawrence Berkeley National Laboratory has found capital costs for transmission lines are triple those of other generation sources due to the lower capacity factors of wind at about 30 percent compared to about 90 percent for base-load plants (7). Transmission costs are also driven higher by the need to locate windmills further from load centers. Typically, ratepayers must pay extra transmission costs of about two cents more for wind power (e.g., three cents compared to one cent or even less for base-load generation).
Moreover, states have misrepresented the extra indirect costs of integrating the intermittent output from wind into the grid......
Read the entire article at: https://wind-watch.org/doc/?p=3601
Big Wind's Dirty Little Secret: Toxic Lakes and Radioactive Waste
The wind industry promotes itself as better for the environment than traditional energy sources such as coal and natural gas. For example, the industry claims that wind energy reduces carbon dioxide emissions that contribute to global warming.
But there are many ways to skin a cat. As IER pointed out last week, even if wind curbs CO2 emissions, wind installations injure, maim, and kill hundreds of thousands of birds each year in clear violation of federal law. Any marginal reduction in emissions comes at the expense of protected bird species, including bald and golden eagles.
The truth is, all energy sources impact the natural environment in some way, and life is full of necessary trade-offs. The further truth is that affordable, abundant energy has made life for billions of people much better than it ever was.
Another environmental trade-off concerns the materials necessary to construct wind turbines. Modern wind turbines depend on rare earth minerals mined primarily from China. Unfortunately, given federal regulations in the U.S. that restrict rare earth mineral development and China’s poor record of environmental stewardship, the process of extracting these minerals imposes wretched environmental and public health impacts on local communities. It’s a story Big Wind doesn’t want you to hear.
Rare Earth Horrors
Manufacturing wind turbines is a resource-intensive process. A typical wind turbine contains more than 8,000 different components, many of which are made from steel, cast iron, and concrete. One such component are magnets made from neodymium and dysprosium, rare earth minerals mined almost exclusively in China, which controls 95 percent of the world’s supply of rare earth minerals.
Simon Parry from the Daily Mail traveled to Baotou, China, to see the mines, factories, and dumping grounds associated with China’s rare-earths industry. What he found was truly haunting:
As the wind industry grows, these horrors will likely only get worse. Growth in the wind industry could raise demand for neodymium by as much as 700 percent over the next 25 years, while demand for dysprosium could increase by 2,600 percent, according to a recent MIT study. The more wind turbines pop up in America, the more people in China are likely to suffer due to China’s policies. Or as the Daily Mail put it, every turbine we erect contributes to “a vast man-made lake of poison in northern China.”
Big Wind’s Dependence on China’s “Toxic Lakes”
The wind industry requires an astounding amount of rare earth minerals, primarily neodymium and dysprosium, which are key components of the magnets used in modern wind turbines. Developed by GE in 1982, neodymium magnets are manufactured in many shapes and sizes for numerous purposes. One of their most common uses is in the generators of wind turbines.
Estimates of the exact amount of rare earth minerals in wind turbines vary, but in any case the numbers are staggering. According to the Bulletin of Atomic Sciences, a 2 megawatt (MW) wind turbine contains about 800 pounds of neodymium and 130 pounds of dysprosium. The MIT study cited above estimates that a 2 MW wind turbine contains about 752 pounds of rare earth minerals.
To quantify this in terms of environmental damages, consider that mining one ton of rare earth minerals produces about one ton of radioactive waste, according to the Institute for the Analysis of Global Security. In 2012, the U.S. added a record 13,131 MW of wind generating capacity. That means that between 4.9 million pounds (using MIT’s estimate) and 6.1 million pounds (using the Bulletin of Atomic Science’s estimate) of rare earths were used in wind turbines installed in 2012. It also means that between 4.9 million and 6.1 million pounds of radioactive waste were created to make these wind turbines.
For perspective, America’s nuclear industry produces between 4.4 million and 5 million pounds of spent nuclear fuel each year. That means the U.S. wind industry may well have created more radioactive waste last year than our entire nuclear industry produced in spent fuel. In this sense, the nuclear industry seems to be doing more with less: nuclear energy comprised about one-fifth of America’s electrical generation in 2012, while wind accounted for just 3.5 percent of all electricity generated in the United States.
While nuclear storage remains an important issue for many U.S. environmentalists, few are paying attention to the wind industry’s less efficient and less transparent use of radioactive material via rare earth mineral excavation in China. The U.S. nuclear industry employs numerous safeguards to ensure that spent nuclear fuel is stored safely. In 2010, the Obama administration withdrew funding for Yucca Mountain, the only permanent storage site for the country’s nuclear waste authorized by federal law. Lacking a permanent solution, nuclear energy companies have used specially designed pools at individual reactor sites. On the other hand, China has cut mining permits and imposed export quotas, but is only now beginning to draft rules to prevent illegal mining and reduce pollution. America may not have a perfect solution to nuclear storage, but it sure beats disposing of radioactive material in toxic lakes like near Baotou, China.
Not only do rare earths create radioactive waste residue, but according to the Chinese Society for Rare Earths, “one ton of calcined rare earth ore generates 9,600 to 12,000 cubic meters (339,021 to 423,776 cubic feet) of waste gas containing dust concentrate, hydrofluoric acid, sulfur dioxide, and sulfuric acid, [and] approximately 75 cubic meters (2,649 cubic feet) of acidic wastewater.”
Wind energy is not nearly as “clean” and “good for the environment” as the wind lobbyists want you to believe. The wind industry is dependent on rare earth minerals imported from China, the procurement of which results in staggering environmental damages. As one environmentalist told the Daily Mail, “There’s not one step of the rare earth mining process that is not disastrous for the environment.” That the destruction is mostly unseen and far-flung does not make it any less damaging.
All forms of energy production have some environmental impact. However, it is disingenuous for wind lobbyists to hide the impacts of their industry while highlighting the impacts of others. From illegal bird deaths to radioactive waste, wind energy poses serious environmental risks that the wind lobby would prefer you never know about. This makes it easier for them when arguing for more subsidies, tax credits, mandates and government supports.
IER Policy Associates Travis Fisher and Alex Fitzsimmons authored this post.
The Institute for Energy Research (IER) is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today's global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.
Google buys wind Energy; Cost to Taxpayers likely to be more than $350 million
Google buys wind Energy; Cost to Taxpayers likely to be more than $350 million
On September 13, 2013, Google announced[i] that it had signed a contract to buy the entire output of the 239.2 megawatt Happy Herford “wind farm” that is being developed by Chermac Energy near Amarillo, Texas. The project is expected to begin operation in late 2014.
Undoubtedly the developer of the facility, Chermac Energy[ii] is pleased to have a 20-year contract[iii] for the sale of the electricity that will be produced. The Google deal will provide the developer a guaranteed cash stream that will make it possible for Chermac to obtain financing for the project.
Undoubtedly, Google is pleased with all the favorable publicity the company has received for being so environmentally committed even though the wind-generated electricity will not be used in a Google facility. Instead, according to Google, the electricity will be sold in the wholesale market and Google will purchase the electricity it needs from the utilities serving its facilities or a wholesale supplier. Google will “retire” the renewable energy credits (REC) resulting from the deal.
The “big losers” in the Google transaction will be taxpayers, a point that none of the media stories have mentioned. Specifically, taxpayers will have to pick up the cost of the tax breaks that the “wind farm” owner (currently Chermac) will enjoy. As explained below, the tax burden that will be shifted from the “wind farm” owner to remaining taxpayers will be at least $170 million and probably more.
The most lucrative federal tax break for the project owners will probably be the federal wind “production tax credit” (PTC). This tax break will provide the owners with a tax credit, currently set at $0.023, for each kilowatt-hour of electricity that the “wind farm” produces during the first 10 years of operation. The $0.023 rate applicable during 2013 is subject to upward adjustment for inflation and undoubtedly will be increased during the next 10 years.
Also, the “wind farm” owners will likely qualify also for another lucrative federal tax break known as “accelerated depreciation” which allows the owners to depreciate for tax purposes the entire capital cost of the wind energy equipment over a 5-year period, thus providing a significant cash flow benefit.
The actual cost of the PTC to taxpayers can only be estimated at this time since the amount paid depends on the amount of electricity produced as well as the rate at the time of production. The benefit to the owners and added tax burden to remaining taxpayers can be estimated with a few assumptions. Specifically:
1. The stated capacity of the planned Happy Hereford “wind farm” is 239.2 megawatts (MW) or 239,200 kilowatts (kW).
2. Amount of electricity produced each year will only be known after the fact since this will depend on wind conditions at the site and condition of the turbines. Two large existing “wind farms” in the Amarillo areas had capacity factors[iv] of about 45% during 2011,[v] among the highest in the US.
3. Assuming that Happy Hereford will achieve a capacity of 45%, the project would produce approximately 942,926,400 kilowatt-hours (kWh) of electricity each year (that is, 239,200 kW capacity x 8760 hours per year x .45 capacity factor = 942,926,600 kWh).
4. Production of 942,926,400 kWh x the 2013 rate of $0.023 would produce an annual PTC break for the “wind farm” owners and annual cost to taxpayers of $21,687,307. At this rate, the tax break would be $216,873,070 over 10 years if production continued at the same level.
5. If the PTC rate is increased due to inflation adjustments to an average of $0.026 during the 10 year operation, the average annual PTC break would be $24,516,086 per year and $245,160,860 over the 10-year period.
Google had earlier announced the purchased the output of two other wind farms:
1. In July 2010, Google announced[vi] the purchase of 114 MW of the capacity of NextEra’s Story County II “wind farm” in Iowa. This project began producing electricity in 2009. Assuming a capacity factor of 35%, this project would produce 349,524,000 kWh of electricity per year and earn production tax credits of $8,039,052 in one year at a rate of $0.023 (the 2013 rate) or $80,390,520 in 10 years if the average rate over the 10 years turns out to be $0.023.
2. In April 2011, Google announced[vii] the purchase of the output of NextEra’s 100.8 Minco II “wind farm” in Oklahoma. This project began producing electricity in 2011. Assuming a capacity factor of 40%, this project would produce 353,203,200 kWh of electricity per year and earn production tax credits of $8,123,674 in one year when receiving a rate of $0.023 (the 2013 rate) or $91,832,830 over 10 years if the average rate over that time turns out to be $0.026.
As indicated earlier, the actual 10-year cost of the wind Production Tax Credit (PTC) tax break for the owners of the three projects will depend on their actual production and the PTC rates that are in effect during each of those 10 years. Based on the assumptions outlined above, the three projects signed up by Google probably will cost taxpayers between $370 million and $417 million for the production tax credits received by the “wind farm” owners over the first 10 years of each of the projects’ operation.
In summary, one big winner in the Google purchase of wind-generated electricity from three “wind farms” would be Google because of all the favorable press attention. The other big winners will be the project owners because of the lucrative tax breaks. The big losers will be taxpayers who must pick up the tax burden escaped by the owners or, perhaps more accurately, their children and grandchildren who will inherit the huge and growing national debt, now about $17 trillion.
Glenn R. Schleede*
* Schleede is semi-retired after working on energy matters in the federal government and the private sector for more than 35 years.
[ii] Identified by Google as a small Native American-owned company based in Oklahoma. While Chermac is the “developer,” it would not be unusual for the project to be sold to a new owner once all regulatory hurdles ahead of construction are crossed.
[iii] Technically, a “Purchased Power Agreement” (PPA). See Google’s explanation at:
[iv] A “wind farm’s” annual “Capacity Factor” is determined by dividing the generating unit’s metered production (in megawatt or kilowatt-hours) by the product of the unit’s rated capacity (in MW or kW) times 8760 hours in a year. Capacity factors for “wind farms” depend, of course, on wind conditions in the area. Capacity factors differ significantly from one location to another.
The U.S. Corn-to-Ethanol Program
The U.S. Corn-to-Ethanol Program
..... The US has been spending energy and other resources which produced CO2 emissions, and billions of dollars for about 8 years to build out the enterprise (cropping + corn-to-ethanol processing + gather/transport/blending), plus spending about 30 - 45 billion dollars in subsidies, tax credits and depreciation write-offs to achieve next to nothing regarding reducing the CO2 equivalent emissions of light duty vehicles. In fact, the corn-to-ethanol enterprise, on an A to Z basis, likely produced a net INCREASE in CO2 emissions.
Far greater CO2 emission reductions, at a much lesser use of energy and other resources, and at a much lesser capital cost, would be achieved just by increasing the CAFE requirements. No wonder the US corn-to-ethanol program is seen as an expensive, ineffective folly in foreign lands.....
Read the entire article at:
Study Evaluates the True Costs of Wind Power
WASHINGTON — The Institute for Energy Research released today a study titled Assessing Wind Power Cost Estimates. The study, written by Dr. Michael Giberson, an economics professor at Texas Tech University, details the costs of wind power that commonly go unreported in studies performed by government-funded groups such as the National Renewable Energy Laboratory (NREL). The study is published as the federal wind Production Tax Credit (PTC), a massive subsidy to the wind power industry, is set to expire at the end of the year. Last year, the PTC received another one-year extension that government analysts project will cost taxpayers $12 billion.
“As Big Wind’s lobbyists fight tooth and nail to extend the wind Production Tax Credit, it is important that we look at the true costs of wind power to taxpayers and ratepayers,” IER President Thomas Pyle said upon release of the study.
“Despite being propped up by government mandates and billion dollar subsidies for decades, wind power continues to be an expensive and boutique energy source that the American people cannot rely on for power when they need it. Although lobbyists for the wind industry prefer to downplay the real costs of wind power, Dr. Giberson has produced a fact-based study that demonstrates just how expensive it really is.”
The study highlights several categories of costs that NREL and others fail to recognize in their studies on the Levelized Cost of Energy (LCOE). Rather than approaching the cost of wind power from the point of view of the wind project developer, Dr. Giberson takes a broader view of the cost of wind power to all Americans, including electricity consumers and taxpayers.
As Giberson states in the study, “While expenses faced by wind project developers are an important element of the overall cost of wind power, the addition of wind power to the power grid involves a number of other costs … Such costs include the expense of transmission expansions needed to develop wind power, other grid integration expenses, and added grid reliability expenses.”
The study finds:
To read the full study, click here (PDF).
To read the executive summary, click here (PDF).
Chambers of Commerce Falsely Promote Wind Power
Misleading Article about Wind Energy in Fort Wayne (IN) Journal Gazette
A highly misleading article, “Winds of change blow across Ohio,” by the CEO of the Van Wert (OH) Area Chamber of Commerce, Susan Monroe, was published by the Fort Wayne (IN) Journal Gazette on October 7, 2013.
Ms. Monroe claims that the 304 Megawatt (MW) Blue Creek Wind Farm, built in Northwestern Ohio by a subsidiary of Spain-based Iberdrola, provides substantial energy and economic benefits.
However, her claims appear to be based heavily on information from Iberdrola, not on an objective analysis of facts about wind energy. Those facts call into question key points made in the article. For example, Ms. Monroe appears to not know that:
· Electricity from wind is very high in true cost and low in true value.
· The principal reasons that companies such as Iberdrola build “wind farms” (including Blue Creek) are generous government tax breaks and subsidies provided to “wind farm” owners.
· The cost of government financial subsidies for wind energy are borne by taxpayers, including Ohio taxpayers, and are in addition to the cost of electricity from wind that shows up in electric bills.
· Her favorable appraisal of wind energy ignores the adverse environmental, economic, electric system reliability, scenic and property value impacts of “wind farms.”.....
Read the entire article at:
Green Madness: Climate Policies To Add 41% To Electricity Prices By 2030
Green Madness: Climate Policies To Add 41% To Electricity Prices By 2030
Britain’s “energy and climate change” policies – including subsidies for wind farms and nuclear power stations – will add 41 per cent to the price of electricity in the UK by 2030 according to forecasts by the energy department. Green measures including billions of [...]
NYT: Renewable Energy in Spain Is Taking a Beating
While the demand for power in Spain has plummeted nearly 6 percent since 2007 because of the slide in economic activity, the share of mandated renewable output has increased.
By ANDRÉS CALA
October 9, 2013
MADRID — Years of disastrous policies, coupled with the economic crisis, have recast renewable energy in Spain. Once touted as the embodiment of progress, wealth and sustainability, the industry is now seen as an unwanted and costly extravagance.
The policy turnaround started in 2010 but picked up momentum with a government decree in July aimed at closing a widening gap between the cost of electricity generation and what consumers pay — known as the tariff deficit.
The decree’s impact has all but erased public support for renewable power, raising alarms in the industry inside and outside Spain.
“We’ve gone from misery to ruin,” said Jaume Margarit, director of the Association of Renewable Energy Producers.
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