You would think that if a utility buys wind and solar power that it would be a boon to consumers by lowering prices – but you would be wrong.
Imagine that your utility calls and says we’ve had 10 days of rain and no wind and we don’t have enough power. You can have electricity six hours a day. Utilities have to maintain capacity with nuclear, fossil fuels and hydro. They have to keep these generating units and payrolls in place. They’re fixed costs. You can’t turn a nuclear plant off and on; it takes days to power up and shut down. Hydro is a bonus source of power – if the lakes are full. That’s why cheap wind power doesn’t matter. Whatever it costs, it does nothing to reduce the cost of maintaining a reliable grid. And it’s cheap only because taxpayers are subsidizing it. Utilities like the Tennessee Valley Authority are being encouraged to buy the power. However, it does not make a dent in the costs of a utility like TVA in maintaining the power grid.
TVA’s purchase of wind power from Iowa, Kansas and Oklahoma to transmit back to the Tennessee Valley power grid makes no economic sense. It’s going to make less sense when a tornado takes out all the windmills subsidized by Oklahoma taxpayers.
Understand that I think alternative energy is a good idea. A program of tax credits and grants to businesses and homeowners to install solar panels to reduce consumption would be worthwhile. It would reduce demand and, over time, the savings would pay for the system. But to try to blend alternative energy sources into a reliable massive power grid for a utility the size of TVA does not reduce costs, and it cannot exist without taxpayer subsidies.
If utilities could rely on alternative energy sources and save money, it wouldn’t require federal government encouragement and taxpayer subsidies. It can be argued that the subsidies and the utility purchases will lead to more efficient and cheaper ways to produce solar power. That would be a good thing. But that can be done on a house-by-house, business-by-business basis. TVA has nuclear power plants, and it has converted coal-fired plants to cleaner-burning natural gas. It doesn’t need to get into wind power contracts.
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