Wind power costs in U.S. are six times higher than claimed
Author: Holly, S. MichaelMany 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
0 comments Posted by Unknown at 8:40 PM
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 more factories sprang up, the banks grew higher, the lake grew larger and the stench and fumes grew more overwhelming.
‘It turned into a mountain that towered over us,’ says Mr Su. ‘Anything we planted just withered, then our animals started to sicken and die.’
People too began to suffer. Dalahai villagers say their teeth began to fall out, their hair turned white at unusually young ages, and they suffered from severe skin and respiratory diseases. Children were born with soft bones and cancer rates rocketed.
Official studies carried out five years ago in Dalahai village confirmed there were unusually high rates of cancer along with high rates of osteoporosis and skin and respiratory diseases. The lake’s radiation levels are ten times higher than in the surrounding countryside, the studies found.
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.”
Conclusion
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
0 comments Posted by Unknown at 6:15 PM
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*
Ashburn, VA
*
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: http://static.googleusercontent.
com/external_content/untrusted_dlcp/www.google.com/en/us/green/pdfs/renewable-energy.pdf
[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 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:
http://theenergycollective.com/willem-post/287061/us-corn-ethanol-program
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:
- Under more accurate assumptions, the LCOE for wind power is $109 per MWh rather than NREL’s estimate of $72 — a more than 50 percent increase.
- NREL’s cost estimates exclude key categories of costs such as the cost of transmission and grid balancing for far-away, intermittent wind sources.
- PTC-subsidized wind power projects distort electricity markets because they can bid as low as negative $35 per MWh and still profit through the PTC.
- Adding wind power via the PTC cannot reduce the overall cost of power to the economy — it merely shifts costs to taxpayers.
To read the full study, click here (PDF).
To read the executive summary, click here (PDF).
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.[1]
Ms. Monroe claims that the 304 Megawatt (MW) Blue Creek Wind Farm,[2]
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.[3]
· 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,[4]
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
0 comments Posted by Unknown at 10:45 AM
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 [...]
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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