If you thought the 2008 presidential race was shattering all records for windy rhetoric, it’s nothing compared to the political eco-rhetoric being spun to US taxpayers – to get them to cough up billions of dollars to fuel a renewable wind power industry boom sensible investors won’t touch with a turbine’s rotor blade.
At present, the growth of the wind power industry in the US lags behind that in Europe. While Denmark and Germany pioneered wind power growth in Europe, Britain is about to steal the world lead. The UK wants to develop an unprecedented 33 gigawatts of wind power, mostly offshore, that will, literally, change the face of Britain. 7,000 wind turbines – one every half-mile around the entire coastline – are to be built in a bid to install power capacity that theoretically would be enough for all 25 million homes by 2020.
Wind power sounds a great European success story – one to be echoed in the US, it seems, as 2008 is set to see wind power developments shatter records for the fourth consecutive year. However, a closer look at the European “success” story reveals that all is not quite as it seems. Wind seems to be blowing in the mind of the politically correct and those on the recent environmentalist bandwagon but the cost is going to be huge, no companies will plunge into it without massive government subsidies and, if actually built, power reliability will take a nosedive.
Having announced the grandiose British plan in January 2008, Industry Secretary John Hutton told the BBC, “There is no way of making the shift to low-carbon technology without there being change and for that change to be visible and evident to people.” So there will be an enormous aesthetic environmental, as well as economic, cost. A cost driven primarily by the belief that man’s carbon emissions are the main cause of the 1 degree or so of global warming the world has experienced over the last century.
But even wind industry supporters spotted the real flaw in the British plan. Gordon Edge, the British Wind Energy Association (BWEA) Director of Economics and Markets, called the government’s plan “piece in the sky.” Edge recognized that private capital investment will not be forthcoming. Dan Lewis of the Economic Research Council added that the British Government was “deluding itself on a grand scale. There will be no race by investors to build offshore wind farms.” These voices recognize that, to date, the taxpayer alone has picked up the wind power tab.
Despite public subsidies to the UK wind industry of over $500 million the government has so far only seen that such a massive investment provided less than half of one percent of the UK’s electricity needs. In August 2007, the BBC’s Radio 4 Costing the Earth program reported that figures proved that government financial incentives were encouraging wind industry firms to cash-in on massive government subsidies and build wind farms on non-viable sites across the mainland. Even in Europe’s windiest country, the winds are just “too variable”, with most turbines consistently under-performing. Having analysed figures submitted to the UK electricity watchdog Ofgem on every farm’s load factor, Engineering Consultant Jim Oswald explained to the BBC, “It’s the power swings that worry us. Over a 20-hour period you can go from almost 100 percent wind output to 20 percent.”
The recommended “load factor” to make a wind farm economically viable and efficient is just over 30 percent. However, many of Britain’s onshore farms have been running at around 20 percent, with some, in urban areas, dropping as low as 9 percent. Oswald believes that an over-reliance on wind power will result both in major power failures across the UK and an increase in electricity bills of up to 50 percent.
While nothing comes close to the capriciousness of nature itself, the industry also still suffers from some severe technical difficulties. In August 2007, Germany’s Der Spiegel reported the rising incidence of “mishaps, breakdowns and accidents” associated with ever-larger turbines. When one rotor blade broke away in Oldenburg, northern Germany, leading to an examination of six others, the results proved so alarming that the authorities immediately ordered four to be shut down. The Der Spiegel article noted that manufacturer’s promises that turbines would last for 20 years have proven hollow. German manufacturer’s cannot build turbines fast enough to meet current demand. By late 2007, the German wind power industry had expanded by 40 percent, according to the German Wind Energy Association, providing work for 74,000 people. But the ‘success’ of the industry is not allowing time for proper stress testing procedures.
Industry insider Jerome à Paris, writing on the Oil Drum: Europe website as recently as December 2007, admitted that the industry is still suffering from “unresolved technical difficulties with some turbine models that have been withdrawn from the market.” Given that turbines are the backbone of the whole industry, this has undoubtedly proven a key deterrent for prospective investors – except prospective governments, apparently.
Much, too, has been written about Denmark’s success as the world’s wind power pioneers. But the regularly repeated claim that Denmark generates 20 percent of its electricity demand from wind sources is highly misleading. That 20 percent of Denmark’s electricity is not supplied continuously from wind power. Such is the variability of supply that it relies heavily on the proximity of near neighbors Norway and Sweden to take their excess capacity. In 2003 its export figure for wind power electricity production was as low as 84 percent as Denmark found it could not absorb its own highly variable wind output capacity into its domestic system. The scale of public subsidy in Denmark was such that it in 2006/7 it came increasingly under severe scrutiny in the Danish media from headlines claiming it was out of control.
In a recent US report about Silicon Valley clean energy investments, Vinod Khosia, founder of Khosia Ventures (representing dozens of US clean energy companies) says, “I worry about over-investing from firms that don’t understand the energy markets.” He’s not alone. In an astute article in Energy Pulse (June 2007) Consulting Engineer Brian Leyland warned that the entire alternative energy renewables investments boom may turn into just another “dotcom bubble”.
Leyland notes that the boom in renewable energy is driven by “a belief that we must reduce emissions of manmade CO2” which has in turn “led to direct and indirect subsidies for otherwise non-economic renewables. These subsidies and tax breaks caused the boom. Without them, it wouldn’t have happened.”
In mid-January 2008 the American Wind Energy Association (AWEA) issued a press release showing that the US wind industry is set, in 2008, for its fourth consecutive year of record growth. Last year alone saw a 45 percent wind power expansion. American wind farms will generate around 48 billion kWh of wind energy in 2008, just over 1 percent of US electricity supply. Randall Swisher, the AWEA Executive Director, was ecstatic. “This remarkable and accelerating growth is driven by strong demand, favourable economics, and a period of welcome relief from … federal production tax credit (PTC) for wind power.” (italics ours.) By “favourable economics” we can only assume Swisher is referring to the ‘bottomless pockets’ of taxpayers. Swisher rightly also implies just what difficulties the industry will be in if government does not extend PTCs, the “only existing US incentive for wind power”, and provide other tax incentives. In other words, the industry will survive and flourish – as in Europe and Britain and as with any bad business model industry – only if the ‘dumb’ taxpayer can be forced to pay for it.
The bottom line is that the renewables debate, and investment in it, is as much about ideology and political belief as it is about economics and environmental issues. When the real cost of turbine power as a major player toward our future power needs is assessed, the answer just ain’t “blowing in the wind”.
By Peter Glover and Michael Economides
23 January 2008
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