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FAQ — Economics

How much does it cost to build a wind power facility?

Construction of a wind power facility costs between $1 million and $2 million per megawatt of capacity.

How much subsidies do wind power developers get?

At the federal level, the production or investment tax credit and double-declining accelerated depreciation can pay for two-thirds of a wind power project. Additional state incentives, such as guaranteed markets and exemption from property taxes, can pay for another 10%.

Is wind energy subsidized more than other forms of electricity?

In absolute dollars, the support of wind energy is small compared to other forms of electricity. That is because the contribution of wind energy is minuscule. Per unit of energy, however, the subsidies for wind can be seen to be much greater. See “Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2010.” It could be argued that it is worth it if it helps clean the air, but there is no evidence that wind power does so.

What is the Production Tax Credit (PTC)?

The federal production tax credit (PTC) currently provides 2.2 cents for every kilowatt-hour of a privately owned wind turbine’s production for ten years.

What is a Renewable Portfolio Standard (RPS)?

A renewable portfolio standard (RPS), or renewable energy standard (RES) is a state mandate that utilities buy a certain percentage of their power from renewable sources as they are defined by the statute. The RPS typically sets up a lucrative artificial market in “green credits.” The industry is working hard to impose a national RPS.

What is a green tag, or renewable energy certificate (REC)?

Renewable portfolio standards usually include a provision to allow buying “green tags,” also called renewable energy certificates or credits (or renewables obligation certificates, ROCs, in the UK), instead of actual “green energy.”

The theory is that if there is not a local source of renewable energy, a utility can thus support renewable sources elsewhere. The weakness of such a system is that the renewable generator sells its energy twice, once as real energy and again as a green tag (or credit). The buyer of the green tag is therefore not in fact reducing the use of “nongreen” energy. It may not surprise the reader to learn that green tags was a scheme invented by Enron.

Since the wind is free, will wind power reduce my electric bill?

The wind is free, but the turbines and their maintenance aren’t, not to mention the transmission infrastructure that must be overbuilt to support them. Subsidies are designed to keep the price competitive with other sources but not lower. If the price is indeed lower, as with all of our energy it’s because more of your taxes are going to the wind power companies.

Do wind turbines affect property values?

A survey of property assessors in the UK found that a nearby wind power facility lowers property values by up to 15% a year for two years, after which the effect starts to level out. In the US, neighboring residences are often bought by the wind power company, which then rents them to people who agree to not complain about the noises and vibration.

In the discussion of property values, it must be remembered that in most places they generally increase steadily. So any slowing down of that normal rise because of the construction of wind power facilities is in fact a loss of value.

Common sense says that given two otherwise identical properties, the one that is not next to an industrial wind power facility or whose view does not include such a facility is likely to be considered more valuable.

How much taxes do wind power facilities pay to communities?

The usual arrangement is arranging “payment in lieu of taxes” (PILOT), so that the wind power company controls what it pays. When they are forced to pay their fair share in taxes, they typically contest it, forcing communities to spend lots of money in legal fees.

In many cases if a community does get a “windfall” from the company, the state adjusts its payments to the town so that the financial gain is largely canceled.

In addition, the presence of a wind power facility is likely to drive down the value of surrounding properties, thus causing a loss of tax revenue that cuts into the possible gain.

How many jobs does a wind power facility create?

Construction of a wind power facility creates a lot of jobs for roadwork, excavation, and cement hauling, but they are temporary. The specialized work of installing the turbines is typically done by people the turbine manufacturer brings in from outside of the community. After the turbines are connected, one permanent, typically low-paying, job per 10-20 megawatts of capacity is the average.

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