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).
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