I want to believe in the wind.
I’d like to think that it will blow across the West Texas plains, bringing cheap, clean power and leaving in its path jobs that spring forth and revive the economies of dying rural towns.
Apparently, the Public Utility Commission would like to believe that, too. It wants to believe it so much that on Friday it tentatively decided to spend $5 billion of our money to build transmission from wind farms in West Texas to the rest of the state.
It’s not actually the amount of money that makes me uncomfortable. Big power projects always come with big price tags. Once that cost is spread across all the customers in the competitive market, it will mean about $4 a month.
Who wouldn’t spend a mere $48 a year for power that reduces pollution and eases our fossil-fuel dependency?
Unfortunately, wind power is far more expensive. In fact, it’s the most expensive form of generation we have in Texas.
Each megawatt of wind power costs about $53 to generate, making it more expensive than coal, nuclear or natural gas generation, according to data from the Electric Reliability Council of Texas, the state’s grid operator. Even with economies of scale, it’s still going to be more expensive than other sources, based on projections by the American Wind Energy Association.
About half the states, including Texas, now require that part of their electricity come from renewable sources, and wind has vaulted in popularity, just as ethanol once held our fancy as the favored fuel of the future.
Texas has become enamored of its own wind. We now have the biggest wind-generating capacity in the country, and we’re building more. But the reason isn’t because we’re motivated by environmental concerns – that’s just feel-good marketing to rally the green crowd and woo the La-Z-Boy environmentalists.
Wind power is an open trough of government subsidies, tax credits and state mandates. Taken together, it’s a massive corporate welfare effort that means big money for the wind-power developers and big costs for the rest of us.
Ironically, at a time when Texas extols the virtues of free markets for electricity, it’s investing heavily in the most subsidized form of power.
For every $100 million of investment, wind-power developers have received more than $74 million in federal tax credits and other benefits, according to a recent study by Bernard Weinstein and Terry Clover, professors of applied economics at the University of North Texas. In Texas, we ladle on additional state and local incentives, including corporate income tax breaks and local property tax abatements.
The federal subsidies include renewable energy tax credits of about 2 cents for every kilowatt-hour produced. Those credits are set to expire at year’s end, but the industry is lobbying Congress to extend them. Some industry executives told The Associated Press recently they fear a slowdown in wind development if the credits expire.
That’s the problem with businesses whose only profits come from government support. The support can go away. Then the businesses will, too, and we’re left with a $5 billion transmission line sitting on the West Texas plains like a discarded extension cord.
As I mentioned in an earlier column, wind’s capacity is overstated because its reliability is low. Because the wind doesn’t always blow, it can’t be added to the base-load generation in Texas. That means it will have to be supported by additional power plants using other fuels – coal, natural gas or nuclear. And wind generates the least at the times of year when we use the most electricity.
The uncertainty of when wind power will come into the grid adds to the market volatility. Those variations put stress on the system and drive up wholesale power prices. Yet wind companies aren’t required to pay any of those costs. Instead they’re ultimately passed on to us.
As noted by PUC Commissioner Julie Parsley, who cast the lone dissenting vote Friday, we should be worried about putting too much unreliable generation into the grid.
Wind certainly has a place in our overall generating scheme. We need to diversify our energy sources, and we need to develop renewable ones. But it’s an auxiliary source. We also need generation that’s reliable and makes economic sense.
The costs and uncertainty of wind simply aren’t worth the amount of investment. Five billion is just the beginning. The true costs make it clear: Wind is overblown.
By Loren Steffy
19 July 2008
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