High Cost and Low Value of Electricity From Wind

8/14/2019 High Cost and Low Value of Electricity From Wind

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SPPIREPRINTSERIES February10,2010

THETRUECOSTOFELECTRICITYFROMWINDISALWAYS

UNDERESTIMATEDANDITSVALUEISALWAYSOVERESTIMATED

byGlennR.Schleede


2/22

TABLEOFCONTENTSINTRODUCTION........................................................................................................................... 3

PERVASIVEMISUNDERSTANDINGOFTHETRUECOSTANDVALUEOFELECTRICITYFROMWIND ................................................................................................................................. 3

IMPROVINGPUBLIC,MEDIAANDPOLITICALLEADERSUNDERSTANDINGOFWINDENERGYCOSTSANDVALUE ..................................................................................................... 4

SIXPOINTSCRITICALTOANACCURATEUNDERSTANDINGOFTHEHIGHTRUECOSTANDLOWVALUEOFELECTRICITYFROMWIND .................................................................. 5

POINT1: Thereisafundamentaldifferencebetweenwindturbinesandreliableelectricgeneratingunits. ....................................................................................................... 6

POINT2: Windturbineshavelittleornocapacityvalue. ................................................... 7

POINT3: Electricityproducedbywindturbinesi.e.,thekilowatthours(kWh)haslessrealvaluethanelectricityproducedbyreliablegeneratingunits.. ....................... 8

Point4: Largepartsofthetruecapitalandoperatingcostsofelectricityfromwindarehiddenbecausemassivefederal,stateandlocaltaxbreaksandsubsidiesshiftmuchofitstruecostfromwindfarmdevelopersandownerstotaxpayers

andelectric

customers. ............................................................................................ 8

Federaltaxbreaksandsubsidies. ........................................................................... 9

Statetaxbreaksandsubsidiesforwindfarmowners.................................... 14

Localgovernmentandeconomicdevelopmentagencytaxbreaksandsubsidies.................................................................................................................. 15

POINT5: Otherimportantelementsofthefull,truecostofelectricityfromwindareoftenhiddenorignoredbywindenergyadvocates....................................................... 16

POINT6: Noonereallyknowsthetruecostperkilowatthour(kWh)ofelectricityfrom

windturbines

because

all

estimates

of

such

costs

are

based

on

highly

questionableassumptionsreallyguessesthatareuntested. ........................ 18

THEPRECEDINGPOINTSAREFOCUSEDONFINANCIALCOSTANDVALUE,NOTEXTERNALITIES.......................................................................................................................... 20

CONCLUSIONS........................................................................................................................... 20

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THETRUECOSTOFELECTRICITYFROMWINDISALWAYSUNDERESTIMATEDANDITSVALUEISALWAYS

OVERESTIMATED

byGlenn

R.

Schleede

|February

4,

2010

INTRODUCTION

Probably the most common wind energy question that I receive from analysts, reporters,and interested citizens deals with the cost of electricity from wind. The frequency of thequestionisunderstandablesinceestimatesprovidedbythewindindustry,federalandstateagencies and contractors,andthemediaunderstate thetruecostand ignorethefact thatelectricityfromwindisverylowinvalue.

Typically, those asking the question would like a simple way to compare the cost ofelectricity from wind with the cost of electricity from other sources. Unfortunately, thatisntpossible. Forthosewhoinsist:

Thefirstshortanswer isthatthetruefinancialcostofelectricityfromwind ishugecomparedtoelectricityfromreliablegeneratingsources.

The second short answer is that the cost of electricity from wind should not becompared with the cost of electricity from reliable generating sources because thevalueofelectricityfromwindismuchlower.

PERVASIVEMISUNDERSTANDINGOFTHETRUECOSTANDVALUEOFELECTRICITYFROMWIND

Infact,fewpeople inthegeneralpublic,mediaorgovernmentknowthefactsaboutthehightruecostandlowtruevalueofelectricityfromwind. Forexample,notlongago,thedelegateto the General Assembly representing our district in Virginia stated repeatedly during atelephonictownhallthatelectricityfromwindisnowcompetitivewithelectricityfromcoal. The delegate has a degree in electrical engineering and a long record ofaccomplishmentsinelectronics. Hisstatementisconsistentwithclaimsoftenmadebywindindustry

lobbyists

but,

unfortunately,

the

statement

is

false.

ThedelegatesfalsestatementisunderstandablesincetheUSDepartmentofEnergy(DOE),DOEs National Laboratories and other contractors (all paid with tax dollars), the windindustry; and other wind energy advocates have, for years, issued false and misleadingclaimsaboutthecostandvalueofelectricityfromwind.

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Criticallyimportantamongtheelementsoftruecostthatareoftenunderstatedorignoredbywindenergyadvocatesisthehugecostoftaxbreaksandsubsidiesprovidedtothewindindustry. Initially,taxbreaksandsubsidiesforwindenergywere justifiedongroundsthatthey were necessary to help an emerging technology compete with existing technologiesfor producing electricity until the technology was more thoroughly developed anddemonstrated.

Federal,stateandlocalgovernmenttaxbreaksandsubsidiesforwindenergyhavebecomesoprevalentthat itsvirtuallycertainthatthepoliticiansandregulatorswhoprovidethemhavenounderstandingoftheirmagnitudeandcost. Itsalsovirtuallycertainthattheyhavenotweighedbenefitsandcosts. Iftheyreallyhavedoneeither,thereisnoquestionbutthattheyhavedecidedtoputthespecialinterestofthewindindustryaheadoftheinterestsoftaxpayersandelectriccustomerswhoarepayingfortheirlargess.

Wind industry lobbyists have been exceedingly effective in winning huge tax breaks andsubsidiesfromgovernments. When initiallyproposed,windenergyadvocatesarguedthat

tax

breaks

and

subsidies

were

necessary

to

permit

a

relatively

new

and

developing

technologytogainafoothold incompetitionwithothersourcesofenergyforproducingelectricity. However,industrydemandsforcontinuation,expansionandextensionofsubsidieshave made it clear that there are no longer any serious expectations that wind energy iscompetitiveorthatimprovementsinthetechnologywilleventuallymakeitcompetitive.

Instead, it appears that the only hope that wind energy would become economicallycompetitive with traditional energy sources is if the cost of electricity from traditionalsourcesweredrivenmuchhigherwithalltheadverse impactsonelectriccustomersandlocalandnationaleconomiesthatresultfromhighelectricityprices.

IMPROVINGPUBLIC,MEDIAANDPOLITICALLEADERSUNDERSTANDINGOFWINDENERGYCOSTSANDVALUE

Thefalseclaimsandthewidespreadmisunderstandingaboutthefull,truecostsandthelowvalueofelectricityfromwinddemonstratethatitistimetofocusonthefacts. Itwouldbenice if this could be done in a brief paper but brief papers have not been effective ingettingthroughtopeople(particularlythoseingovernmentandthemedia)whoshouldbepresenting the public and our political leaders with accurate information. Therefore, itapparently isnecessarytoexplainthebasicswhich,unfortunately,requiresa longpaperthatdelvesintothedetailsaboutthecostandvalueofelectricityfromwind.

Accordingly, this paper provides details on all the key factors that must be taken intoaccountwhenmakinghonestestimatesofthetruecostandvalueofelectricityfromwindenergy. This paper will not provide numbers that can be compared because thedevelopment of valid and reliable cost and value data requires detailed information andassumptionsthatvarywidelyamongwindfarms,thegenerationmixandelectricitysupplyanddemandsituationwithinelectricgridcontrolareas,andotherfactors.

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Hopefully, once the factors that affect true cost and value of electricity from wind areunderstood,analysts, investors,reporters,andothers interested inhonestcomparisonsofcostsandvaluewillbeabletomakerealisticestimatesofatleastthecostsperkilowatt(kWof)windgeneratingcapacity.

But,asexplainedbelow,reliableestimatesofthecostperkilowatthour(kWhof)electricity

produced

by

wind

farms

will

still

not

be

possible

because

such

estimates

are

entirely

dependentonfactorsthatareandwillremainunknown. Assumptions(i.e.,guesses)madeby those who claim they know the cost per kWh of electricity from wind can easily be inerrorbyafactoroftwoormore.

Whetherestimatingthetruecostofwindgeneratingcapacityorcostofelectricityproducedfrom wind, the cost of federal, state, and local tax breaks and subsidies are dominantfactors. There is no longer any serious doubt but that tax breaks and subsidies notenvironmental,energy, oreconomic benefits aretheprimary reasonsthatwindfarmsarebeingbuilt.

SIXPOINTSCRITICALTOANACCURATEUNDERSTANDINGOFTHEHIGHTRUECOSTANDLOWVALUEOFELECTRICITYFROMWIND

Comparing the cost of electricity from wind with the cost of electricity from reliablegenerating units is a classic apples to oranges comparison (or perhaps crab apples tooranges!). Thethingsbeingcomparedmaylooksimilarbut,infact,arevastlydifferent. Insummary,andasdetailedbelow,thosemakingcomparisonsofthecostofelectricityfromwindoftenoverlookfourcriticallyimportantfacts:

The full, true cost of electricity from wind is seldom revealed because of massivefederal, state, and local government tax breaks and subsidies for wind farmowners.

No one really knows the true cost per kilowatthour (kWh) of producing electricityfrom wind turbines because all such calculations are always based on assumptions(i.e.,guesses).

Thevalueofelectricitythatisproducedbywindturbinesismuchlowerthanthevalueofelectricityfromreliablegeneratingunitsbecausetheoutputfromwindturbinesisintermittent,volatile,unreliableandmostlikelytobeproducedwhenleastneeded.

The value of wind turbine generating capacity is much lower than the value of thecapacity of reliable generating units because wind turbines produce electricity only

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1 so they cannot be counted on

whenelectricitydemandreachespeaklevels.

POINT1: There isa fundamentaldifferencebetweenwind turbinesand reliableelectricgeneratingunits.

Thereis

a

vast

difference

between

electric

generating

units

that

produce

electricity

only

intermittently,suchaswindturbines,andreliablegeneratingunits thatcanbecountedontoproduceelectricitywhenitisneeded. Tobemorespecific:

1. Electricitycannotbestoredinsignificantamountsand,therefore,mustbeproducedasitisneeded(ordemanded)bycustomers. Demandforelectricitybycustomerswhetherresidential,commercial,orindustrial varieswidelybytimeofday,dayofweek, season of the year, prevailing weather and temperature, strength of theeconomy,andotherfactors

2.Managers

of

electric

grids

are

responsible

for

assuring

that

enough

electricity

is

always available to meet customers demand and, whiledoing this,must keep thegird inbalance(interms ofsupply& demand,voltageand frequency) . To do this,grid managers must always have available and under their control generatingunitsthatare:

a. Reliable,that is,theunit(s)mustbeavailableoroperableandhavenecessaryfuelsothatitcanbecountedontoproduceelectricitywhenitsoutputisneeded,and

b. Dispatchable,thatis,theunit(s)mustbesubjecttothegridmanagerscontrolsothat itcanbebroughton line(i.e.,beginproduction)ortakenoff line(i.e.,stop

production),and,

for

a

unit

on

line,

it

can

be

ramped

up

or

down

(i.e.,

increasing

ordecreasingitsoutput).

Inadditiontokeepingthegridinbalanceatalltimes,gridmanagersmustalsohavereliableanddispatchablegeneratingcapacityinreserve,whichcapacitycanbecalleduponimmediatelyifthereisanunplannedoutageofoneormoreonlinegeneratingunits (or transmission lines), or if there is a significant, unexpected increase inelectricitydemand.

Thewind industryoften pretendsthatthisoperating reserveofgenerating capacity

should

be

or

is

a

free

good

that

should

be

available

for

its

use

preferably

at

no

cost to make up for the fact that their wind turbines cant be counted on toproduceelectricitywhenit ispromisedorneeded(i.e.,theturbineshavelittleornoreal capacity value), especially at the time of peak electricity demand. However,

1 Theystartproducingwithwindsofabout6mph,reachratedcapacityaround32mph,cutoutaround56mph,

and restartabout45mph. Muchof the time theyproducenoelectricityoronlysmallamountswellbelow

ratedcapacity.

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cutting into a grids operating reserve means that there would be less of a reserveavailabletoitsrealpurpose.

3. Windturbinesarenotreliableordispatchable. Theyproduceelectricityonlywhenthewindisblowingwithintherightspeedrange(showninfootnote#1). Theiroutputisintermittent, volatile, largely unpredictable, and unreliable. If wind turbines are

connectedto

the

grid

serving

the

control

area,

the

grid

manager

must

have

reliable

generatingcapacityimmediatelyavailabletobackuptheintermittent,volatileandunreliableoutputfromwindturbinesandkeepthegridinbalance.

4. Generating units that qualify as reliable and dispatchable are those with turbinegeneratorspoweredbynaturalgas,oil,coal,nuclearenergyandhydropower.2 Howquicklyageneratingunitcanbebroughtonlineorrampedupordownvarieswidely,dependingonsuchfactorsasthegeneratingtechnology(e.g.,usingsteamturbineorgasturbine),theenergysource,andtheageandconditionoftheunit.

POINT2:

Wind

turbines

have

little

or

no

capacity

value.

Acriticallyimportantfactoraffectingthetruevalueofthecapacityofanygeneratingunitishowmuchoftheunitsratedornameplatecapacitycandefinitelybecountedontobeavailabletogenerateelectricity3andhowmuch itcandefinitelybecountedtoproduceatthe time of peak electricity demand in the control area. This measure is referred to in theelectricindustryastheunitscapacityvalue.

Infact,regardlessoftheirratedornameplatecapacity,4windturbinescantbecountedon to produce any electricity at the time it is most needed; i.e., when electricity demandreachespeaklevels.5 Therefore,windturbinesreallyhavelittleornorealcapacityvalue,

asthat

term

is

used

in

the

electric

industry.

Because wind turbines have little or no real capacity value, electric grid managersresponsible for assuring the reliability of electric service must, instead, look to othergenerating units i.e., those that are reliable and dispatchable for the capacity that isneeded at the time of peak electricity demand. In most areas of the US, peak electricitydemandislikelytooccurinlateafternoononhot,weekdaysinJulyorAugust.

Whenattemptingtocompareeitherthecostorvalueofelectricityfromwindturbines,itisimportanttorecognizethatthefactthatwindturbinesproducelittleornoelectricitymost

2 In some cases, generatingunits poweredby biomass, trash,geothermal energy, and perhaps, solar thermal

energymayalsoqualifyasreliableanddispatchable.3 Forawindturbine,theunitmustbebothoperableandhaveenoughwind.

4 Ageneratingunitsratedornameplatecapacityisexpressedintermsofkilowatts(kW)ormegawatts(MW)

whichisameasureoftheamountofelectricitythatcouldbeproducedbytheunitataninstantintimeifthe

unitwasproducingatfullcapacity.5 FormostareasoftheUS,peakelectricitydemandismostlikelytooccuronhot,weekdaylateafternoonsinJuly

or August. During these times there is little or no wind and, therefore, little or no electricity from wind

turbines.

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ofthetimemeansthattheirratedornameplatecapacityisnotcomparableinvaluetotheratedornameplatecapacityofareliablegeneratingunit. (Aclearexampleofthecrabappletoorangeanalogy.)

POINT3: Electricityproducedbywindturbinesi.e.,thekilowatthours(kWh)haslessrealvaluethanelectricityproducedbyreliablegeneratingunits.

The true value of a kilowatthour (kWh) of electricity depends on when it is produced.Specifically,akWhofelectricityproducedduring periodsofhighorpeakelectricitydemandhasmuchhighervaluethanakWhproducedwhendemand is low6(e.g.,duringnighttimehoursinmostareasoftheUS).

This,too, is a critically important fact whenattempting to compareeithercost orvalueofelectricity from wind turbines with electricity from reliable, dispatchable generating units.The fact is that electricity from wind turbines has a lower value per kWh because thatelectricityisnotonlyintermittent,volatile,largelyunpredictableandunreliable,butitisalso

most

likely

to

be

produced

at

night

and

in

colder

months

when

wind

speeds

are

adequate

to

spintheblades,notattimesofhighorpeakelectricitydemand.

Point4: Largepartsof the truecapitalandoperatingcostsofelectricityfromwindarehiddenbecausemassive federal, stateand local taxbreaksand subsidies shiftmuchofitstruecostfromwindfarmdevelopersandownerstotaxpayersandelectriccustomers.

Wind industry officials and lobbyists as well as the politicians, regulators, and othergovernment officials, government contractors, and nongovernment organizations (NGOs)thatsupportwindindustryinterests,oftenunderstategreatlythetruecostofwindfarms

and

electricity

produced

from

wind

farms.

Sadly,

some

electric

utility

officials

also

participateinhidingthetruecostsofelectricityfromwind.

Wheninitiallyproposed,therationaleforprovidingtaxbreaksandsubsidiesforwindenergywastohelparelativelynewtechnologyforproducingelectricitycompetewithestablishedelectric generating technologies until advances in technology would permit wind tocompetewithoutsubsidies.

However, the massive tax breaks and subsidies now available and the wind industrys wellfinanced lobbyingeffortstopreserve,expand,andextendthemmakesclearthatthere isno

longer

any

serious

expectation

that

electricity

from

wind

will

become

competitive

or

that

significantadvancesinwindtechnologyarelikelytoeverpermitwindtobecomeacompetitivesourceofelectricity.

6 Indisputable evidenceof this isavailable onweb sites for Independent SystemOperators (ISOs)or Regional

TransmissionOperators(RTOs)thatmanageelectricgridsintheUS. Suchwebsitesgenerallyprovidehourby

hour(ormorefrequent)dataonthewholesalepricesofelectricityincompetitivemarkets.8


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The US Energy Information Administration (EIA), in an April 2008 report,7 indicated thatfederal tax breaks and subsidies during 2007 averaged $0.2337 per kWh of electricityproducedbywindduring2007. However,thatEIAreportunderestimatedthetruecostofthetaxbreaksandsubsidiesforwindbecauseit:

Failed to take into account either the value of 5year double declining balanceaccelerated

depreciation

(described

below)

that

is

available

for

wind

farm

equipment,butnotavailableforreliablegeneratingunits.

Didnotcover,ofcourse,over$1billioninadditionaltaxbreaksandsubsidiesforwindenergyawardedin2009bytheUSDepartmentsofEnergyandTreasury(authorizedby various stimulus measures) allegedly to create jobs in the US. As indicatedbelow, a significant share of these awards were for projects owned by foreignentities,coveredequipmentmanufacturedinothercountries,orflowedtoownersofwindfarmswerealreadyunderconstructionorcompleted.

Did

not

cover

state

and

local

tax

breaks

and

subsidies

for

wind

farm

owners.

Amongthemanyfederal,stateandlocaltaxbreaksandsubsidies8thatreducewindfarmdevelopersandownerscosts whileshiftingthosecoststoordinarytaxpayersandelectriccustomersarethefollowing:

A. Federaltaxbreaksandsubsidies.1. AcceleratedDepreciation (MACRS).9 Nearly allthecapitalcostofawindfarm

whetherfinancedwithequityordebt canberecoveredthroughdeductionsfromotherwise taxable income using 5year double declining balance accelerated

depreciation

(5yr.

200%DB).

These

deductions

from

taxable

income

reduce

tax

liabilityattheownersmarginaltaxrate,usually$35foreach$100deduction. Allofthe eligible capital cost can be written off (recovered) over 6 tax years at thefollowingratesillustratedwith$100,000,000ineligiblecapitalcost:

7

US

EIA,

Federal

Financial

Interventions

and

Subsidies

in

Energy

Markets

2007,

table

35,

page

106.

http://www.eia.doe.gov/oiaf/servicerpt/subsidy2/pdf/chap5.pdf.8 Thissummary is limitedprimarilytotaxbreaksandsubsidiesthatbenefit industrialscalewindenergy. There

are others benefitting smaller scale installations installed by residential, commercial, industrial, educational,

andcommunityorganizations.9 MACRSstandsforIRSModifiedAcceleratedCostRecoverySystems,whichprescribesthemethodsthatcan

beusedtowriteoffcapitalcosts(i.e.,deductthecapitalcostoffacilities,whetherfinancedbyequityordebt,

fromtheorganizationsotherwisetaxableincome)overaperiodoftimethatisgenerallyshorterthantheuseful

lifeofthefacilities. DetailsofMACRScanbefoundinIRSpublication946.

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DeductionfromTaxableIncomeTaxYear %ofCapital

Investment AmountFurtherReductioninIncome

TaxLiability(inadditiontoPTC)1st 20% $20,000,000 $7,000,000

2nd 32% $32,000,000 $11,200,000

3

rd

19.2%

$19,200,000

$6,720,000

4th 11.52% $11,520,000 $4,032,000

5th 11.52% $11,520,000 $4,032,000

6th 5.76% $5,760,000 $2,016,000

Totals: 100% $100,000,000 $35,000,000

Note that these deductions from otherwise taxable income and from tax liabilitycould be taken regardless of whether the $100 million wind farm investment isfinancedwithdebtorequity.10

Note also that, in addition to the further reduction in tax liability, this generous

accelerateddepreciation

deduction

for

federal

income

tax

purposes

has

two

other

hugebenefits;specifically:

a. Prompt recovery of all the owners equity investment. Quite likely, the equityinvestmentbywindfarmownersandtheirtaxpartners11wouldbenomorethan 30% with the remaining borrowed to reduce its cost. As the table aboveshows, all of the equity investment would be recovered thru depreciationdeductionsearlyinthesecondtaxyearandinlessthan1yeariftheprojectbeginsoperating late in the first tax year. With no remaining equity investment, theownersreturnonequitywouldbeinfinite.

b. A large interestfree loan. Thedepreciationdeductioncontinueseventhoughallequity has been recovered. Thus, in effect, the owners receive an interest freeloan,courtesyofUStaxpayersforanamountequaltothedebtfinancing.

2. WindProductionTaxCredit(PTC). AwindfarmowneriseligibleforaWindPTC,currently $0.021 per kilowatthour (kWh), for electricity produced during the 1st 10yearsofoperation. ThenewexpirationdateforthePTCwasextendedtoDecember31, 2012. If the illustrative $100 million project had turbines with the combined,

10

Note

also

that

the

US

Congress

enacted

a

50%

1

st

year

bonus

deduction

for

many

capital

investments

placed

inserviceduring2008and2009asaneconomicstimulus. Theeffectofthisbonuspermittedwindfarm

ownerstodeduct60%inthe1st,16%inthe2

nd,9.6%inthe3

rd,5.76%inthe4

thand5

thand2.88%inthe6

thtax

years.11

Totakeadvantageofthelucrativetaxbreaks,awindfarmownermusthavesubstantialtaxableincomefrom

sourcesotherthanthewindfarm. Developerswhodonothaveenoughtaxable incomemerelyfindsome

other organization (often a large bank or Wall Street financial institution with large amounts of taxable

incometheywishtoshelterfrom incometaxes)thatwillbetheirpartnerandpartownerfortheperiodof

time(years)thatisnecessarytocapturethetaxbenefits. Thenthefullownershipflipstothedeveloper. The

developersandtaxpartnersarethebigwinnersandordinarytaxpayerswhobeartheburdenescapedbythe

windfarmownersarethebiglosers.

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ratedcapacityof50megawatts(MW)andtheyoperatedata30%capacityfactor12,the turbines would produce 131,400,000 kWh of electricity each year, the ownerswould receive a tax credit (a direct deduction form tax liability) of $2,759,400 peryearduringthefirst10yearsofoperation,thusreducingfederal incometax liabilityby$27,594,000over10years.13

3. InvestmentTaxCredit (ITC). Stimulus legislation enacted during 2008 and 2009permits wind farm owners to choose an investment tax credit (i.e., a directdeduction from taxes otherwise due) equal to 30% of capital costs in lieu of theProductionTaxCredit.IfthewindfarmownerdoesnothavesufficienttaxliabilitytousealloftheITCdeduction,unusedamountscanbecarriedforwardanddeductedinfutureyears. Thistaxbreakisavailableforprojectsplacedinserviceduring2009and2010orwhereconstructionhasstartedby2010andplacedinservicebeforetheend of 2012. The newly authorized ITC has substantial benefits for wind farmownerscomparedtothePTCbecause(i)thebenefit isavailable immediatelyratherthanovera10yearperiodand(ii)thebenefitisbasedoncapitalcostand,therefore,

is

available

regardless

of

the

amount

of

electricity

produced

by

the

wind

farm.

14

4. CashGrant inLieuofITC.Thegenerous20082009stimulus legislationalsomadewindfarmdeveloperseligiblefortheITCtoelecttoreceiveacashgrantofequalvalue from the US Treasury in lieu of the ITC. During September 2009, The USDepartments of Treasury and Energy awarded grants for wind farm projectstotalingabout$900million. $546millionornearly60%ofthetotal15wasawardedtotheSpainbasedfirm,Iberdrola. TheIberdrolaCEOhasindicatedthatheexpectstowinanother$470millioningrantsfromTreasuryandDOEduring2010.16

Creating jobs was, allegedly, a key reasonfor the $787billion stimulus legislation

butmost

of

wind

farm

projects

included

in

the

$1

billion

in

grants

awarded

by

TreasuryandDOEonSeptember1andSeptember22,2009,werefor(a)projectsthatwerealreadycompleted,nearlycompletedoralreadyfullycommittedtobythegrantrecipients, (b) were equipped with turbines manufactured primarily in othercountries, and (c) were owned by foreignbased companies. Furthermore, windfarmsresultinveryfewnewjobs,certainlyfewerthanwouldbecreatedbysimilarinvestmentsinreliablegeneratingunitspoweredbytraditionalenergysources.

12 Capacity factor is an after the fact measure determined by dividing the actual electricity production (in

kilowatthourskWhormegawatthoursMWhbytheratedcapacitytimesthehours intheperiodbeing

analyzed (e.g.,8760hours inayear). Forthe illustrationabove,thecalculationwouldbeas follows:Annual

productionof131,400,000kWhdividedby8760hoursx50MW(50,000kW)capacity=30%capacityfactor.13

Inreality,capacityfactorsmaydecreasesomewhatasturbinesageduetogearboxfailures,bladecracking,and

bladesbecomefouledfrominsects,hittingbirdsandbats,etc.14

Separatingthetaxbreakfromactualelectricityproduction,ineffect,reducestheownersincentivetomaintain

turbinesandotherwindfarmequipmentsoastomaximizeproduction.15

http://www.greenjobs.com/public/industrynews/inews06694.htm.16

http://www.windwatch.org/news/2009/12/17/iberdrolachiefwarnsoncostofgreenpower/.

11
http://www.greenjobs.com/public/industrynews/inews06694.htmhttp://www.greenjobs.com/public/industrynews/inews06694.htm


12/22

(Clearly,anyclaimthatthehugeexpenditureoftaxdollarsthatweregiventoownersof wind farms would provide significant job and economic benefits in the UScannotbetakenseriously.)

5. LoosenedRequirementsfortaxbreaksandsubsidies. Thesamestimuluslegislationalso relaxed a number of restrictions on that had applied to the tax breaks and

subsidies.

A

report

recently

released

by

DOEs

Lawrence

Berkeley

National

Laboratory (LBNL) while objectionable in several respects provides a usefulsummaryofgeneroustaxbreaksandsubsidiesnowavailableforwindfarms.17

6. US Department Agriculture Grants. While not targeting large commercial windfarms,avarietyofrenewableenergyproductionincentives,18grants,19loans,20andlow interest bond 21arrangements are available for certain wind energy projects.These are also summarized in the LBNL report cited above. Some of thesearrangements are available for large wind turbine projects owned by Rural Electriccooperativesandpublicpowerorganizationsownedbystateandlocalgovernments.

7. DOE Loan Program. A DOE loan program intended to encourage thecommercialization of innovative energy technologies was first authorized by theEnergy Policy Act of 2005 and then was substantially expanded by the AmericanRecovery and Reinvestment Act of 2009. Billions in loans and loan guarantees areavailable for various renewable energy (including wind) and energy efficiencyprojects. Onewindproject(NordicWindpower)hasbeenapprovedviathisprogramfor a $16 million loan. Final regulations for this DOE program were issued onDecember7,200922

8. AdditionalUSDepartment of Energy (DOE) Subsidies. The DOE provides severaladditional

subsidies

to

the

wind

industry,

all

financed

with

tax

dollars,

including:

a. Some$60to$100millionperyearforwindenergyR&Dcontractsandgrants.b. Additional millions in taxpayer dollars for studies, analyses, reports, and

other wind energy promotional information prepared by or for DOEs Office ofEnergy Efficiency and Renewable Energy (DOEEERE), DOEs National EnergyLaboratories,23stateenergyoffices,andotherDOEcontractorsandgrantees.

17 Bolinger,Mark,LawrenceBerkeleyNationalLaboratory(LBNL),RevealingtheHiddenValuethattheFederal

Investment

Tax

Credit

and

Treasury

Cash

Grant

Provide

To

Community

Wind

Projects,

January

2010;

pp.

6

16.

Apparently, theobjectiveof the report is topromotecommunitywindprojectsbyoutlining thegenerous

new taxbreaksmadeavailable forsuchprojects. The reportmakesnoattempt toevaluate theexceedingly

smallbenefitsthatresultfromthehighcosttotaxpayersandelectriccustomersofcommunitywindprojects.18

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US33F&re=1&ee=1.19




http://www.lgprogram.energy.gov/press/FR12709.pdf.23

Particularly the National Renewable Energy Laboratory (NREL) and the Lawrence Berkeley National

Laboratory(LBNL).

12
http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US33F&re=1&ee=1http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US05F&re=1&ee=1http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US46F&re=1&ee=1http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US45F&re=1&ee=1http://www.lgprogram.energy.gov/press/FR-12709.pdfhttp://www.lgprogram.energy.gov/press/FR-12709.pdfhttp://www.lgprogram.energy.gov/press/FR-12709.pdfhttp://www.lgprogram.energy.gov/press/FR-12709.pdfhttp://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US45F&re=1&ee=1http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US46F&re=1&ee=1http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US05F&re=1&ee=1http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US33F&re=1&ee=1


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WhiletheNationallaboratoriesundoubtedlyperformsomeobjectiveworkthatis based on scientific methods and engineering principles, much of theinformation issued by these organizations that deals with wind energy isdemonstrably biased, misleading, and even false. These laboratory activitiesare more akin to those carried out by trade associations that typically provide

onesided

information

(or

propaganda)

that

is

used

to

influence

the

public,

media

andgovernmentofficials.24

c. More taxpayer dollars flowing though DOE and NREL to support various stategovernment wind promotional activities and to state wind working groups,25consistingofwindindustryrepresentativesandotherwindenergyadvocates(butseldom, if ever, include representatives from citizen groups opposed to windfarms)thatworkinsupportofwindindustryobjectives.

9. MandateduseofrenewableenergybyFederalAgencies.26 TheEnergyPolicyActof

2005

requires

the

following

amounts

of

total

electricity

consumed

by

the

Federal

Governmenttocomefromrenewableenergy:

Nolessthan3%infiscalyears20072009 Nolessthan5%infiscalyears20102012 Nolessthan7.5%infiscalyear2013andthereafter.PresidentialExecutiveOrder13423,issuedinJanuary2007,requiresthatatleastonehalf of the required electricity from renewable energy come from new renewablesources. In fact, much of the electricity from renewable energy purchased byfederal agencies comes from wind turbines. Like mandated state green energy

programs,

this

federal

requirement

in

effect

requires

that

federal

agencies

pay

premiumpricesforpartoftheelectricitytheyuse,thuscreatingaspecial,highpricedmarket that is available to wind farms. The higherthanmarket premiums thatmustbepaidforelectricityfromwindareanothersubsidyforthewindindustry. Thehigher prices are paid from agency appropriations which are financed through taxdollars.

10.PubliclandsmanagedbytheUSBureauofLandManagementandUSForestService.Both agencies havepoliciesandregulationsdealingwiththeconstructionof windfarms and related transmission facilities on public lands that they manage. More

than

300

MW

of

wind

turbine

capacity

is

now

located

on

BLMmanaged

lands.

27

24 Examples include NRELs Jobs and Economic Development Impact (JEDI) model that overstates local and

state benefits from wind farms, and LBNLs recent report that claims, falsely, that wind farms do not

adverselyaffectthevaluesofnearbyproperties.25

http://www.windpoweringamerica.gov/state_activities.asp.26

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US01R&re=1&ee=1.27

http://www.blm.gov/pgdata/etc/medialib/blm/wo/MINERALS__REALTY__AND_RESOURCE_PROTECTION

_/energy.Par.58306.File.dat/09factsheetmap_Wind.pdf.

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Typically, rents charged by BLM and USFS are lower than those charged forcomparableprivatelands.

11.Tax breaks and subsidies for wind farm equipmentmanufacturers. One 2009economicstimulusmeasure28establishedanew$2.3billion investmenttaxcreditto encourage the development of a U.S.based renewable energy manufacturing

sector.In

any

taxable

year,

the

investment

tax

credit

is

equal

to

30%

of

the

qualified

investment required for an advanced energy project that establishes, reequips orexpandsamanufacturingfacilitythatproduces29somethingconsideredbytheUSTreasury and Energy Departments as an energy efficiency, conservation, orrenewableenergytechnology,includingwindenergy.

Theapplicationprocessconductedduringthefallof2009resultedintheselectionofdozensofprojectsthatapparentlyexhaustedthe$2.3billionauthorization. Projectsselected for this new tax break included 33 projects involving wind turbines,bearings, towers, and blades totaling more than $250,000,000. Treasury and DOE

have

announced

that

no

more

applications

are

being

accepted

for

this

program.

30

However,PresidentsFY2011budgetrequestsanadditional$5billionfortheprogram.

B. Statetaxbreaksandsubsidiesforwindfarmowners. Manystategovernmentshaveadopted generous tax breaks and subsidies that benefit wind farm developers andowners adding more to the costs that are shifted from developers and owners toordinary taxpayers and electric customers and hidden in their tax bills and monthlyelectricbills.

The specific tax breaks and subsidies vary widely among states. Information for eachstate can be found at a taxpayer financed web site, Database of State Incentives for

Renewables

&

Efficiency,

www.dsireusa.org.

Among

the

scores

of

incentives

forindustrial scale wind farms provided by at least one and often more states are:

1. Stateproductiontaxcredits(e.g.,Iowa).2. Exemptionsfromallorpartofpropertytaxes(e.g.,Iowa,WestVirginia,NewYork).3. Artificiallylowassessments onwindturbines(e.g.,Illinois).4. Exemptions from sales tax on wind farm equipment and materials (e.g.,

Minnesota).5. Lowcostloans(e.g.,industrialdevelopmentbonds).6. RenewablePortfolioStandards(RPS)thattypicallyprescribedsomepercentageofa

distribution utilitys sales must consist of electricity produced from wind or someother

renewable

energy

source

(about

20

states).

7. Purchases of, or markets for, green energy certificates earned by producers ofelectricityfromwind(e.g.,Massachusetts).

28 TheAmericanRecoveryandReinvestmentActof2009(H.R.1),enactedinFebruary2009.

29 http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US52F&re=1&ee=1.

30 http://www.whitehouse.gov/thepressoffice/factsheet23billionnewcleanenergymanufacturingtax

credits.

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8. Green energy programs by electric distribution companies that offer electricityproduced from wind at a premium price either required or encouraged by statePUCorlegislature(manystates).

9. Payments for green energy attributes using revenue collected via a systemsbenefitcharge(effectively,atax)addedtoelectricbills(e.g.,NewYork).

10. Higherallowedearningsforelectricutilityinvestmentsinrenewableenergyfacilities(e.g.,

Virginia).

Atleastfouroftheabovestaterequirements(6,7,8and9)havetheeffectofcreatingaspecialmarketwhereownersofwindfarmsandotherrenewableenergyfacilitiescansell their electricity at above market prices. Of course, the electricity actually used bycustomers paying extra for green electricity is highly unlikely to be produced by arenewableenergyfacility.

Theownerscanreceivethehigher,abovemarketpricesfortheelectricitytheyproduceeveniftheirfacilitiesarenotproducingatthetimetheelectricityisbeingused.

Utilities green energy programs are seldom self supporting. That is, the amountscollectedinpremiumsfromcustomerswhoagreetopayextraarenotadequatetocover(i)thehighercostsofthegreenenergyand(ii)theutilityscostofadministeringthegreen program. Costs not recovered from premium payments are merely passedalongtoalloftheutilityscustomers.

C. Localgovernmentandeconomicdevelopmentagencytaxbreaksandsubsidies. Somelocal government and economic development officials believe that construction ofwindfarms intheirareaswillprovidenew jobsandothereconomicbenefits. Actualbenefits tend to be much less than assumed by wind farm developers and local

officials.

Further,the

cost

of

any

such

benefits

is,

in

one

way

or

another,

shifted

to

ordinarytaxpayersand/orelectriccustomers.

There is no readily available, comprehensive source of information on locally providedtaxbreaksandsubsidies. However,examplesinclude:

1. Low cost loans or bond financing. County or regional economic developmentauthorities may have authority to offer low cost or interest free loans or bondfinancingwhichsignificantlyreduceawindfarmownerscapitalcost.

2.Acceptance

of

payments

in

lieu

of

taxes

or

PILOTS.

For

example,

local

government

and school board officials in some towns in New York accept PILOTS from windfarm owners and give up their statutory authority to override a stateauthorizedexemptionfrompropertytaxes. PILOTsareattractivetolocalofficialsbecausetheytendtobefrontendloaded;thatis,theyprovidesignificantearlybenefitsthatcanbe presented to local voters as an opportunity for near term reductions in homeowners property taxes, new fire trucks or other equipment, restoration of historicbuildings, orother measuresthat cantbe accommodated in local budgets without

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PILOTS are attractive to wind farm owners because their cost over the assumedlifeofthewindfarmaremuchlessthanpayingpropertytaxesandthefrontendbenefitsareoftenhelpfulingainingsupportforprojectsfromcurrenttownofficials

and,perhaps,

citizens

who

do

not

take

into

account

the

lower

long

term

benefits

or

impacts.

POINT5: Otherimportantelementsofthefull,truecostofelectricityfromwindareoftenhiddenorignoredbywindenergyadvocates.

Taxbreaksandsubsidiesarenottheonlyelementsofthefull,truecostofelectricityfromwind that are not transparent and that are often ignored by wind energy advocates. Forexample,additionalelementsofthefull,truecostofelectricityfromwindinclude:

A.Providing

reliable

generation

to

backup

intermittent,

unreliable

generation

from

wind.

Because electricity from wind turbines depends on availability and speed of wind, gridmanagers must always have immediately available enough reliable, dispatchablegenerating capacity to keep grids in balance as wind turbines start producing, varywidelyinoutput,orstopproducing.

Adequate capacity is available on some grids to meet this requirement, but there arecostsofprovidingthisbackupandbalancingservice,whether it isthroughtheuseofaunit running in automatic generation control (AGC) mode, otherwise less than fullcapacity,orinspinningreserve.

Gridmanagers

must

have

available

and

under

their

control

reliable

generating

units

that

canberampedupordown(i.e.,outputincreasedordecreased)orbroughtonline(startproducing)ortakenoffline(stopproducing). Rampingupanddowntobalancevolatilewindturbineoutputmayaddtowearandtearonthebackupunits.

Acriticallyimportantobjectiveinelectricgridmanagementistohavesufficientoperatingreservecapacityavailabletokeepelectricservicereliableandkeepthegridinbalanceinthe event that key generating units (or transmission lines) unexpectedly becomeunavailable (e.g., mechanical failures or other unplanned outages), or if there is asignificant, unexpected increase in demand. Wind industry advocates often assume,

incorrectly,

that

this

critically

important

grid

operating

reserve

should

be

available

as

a

free backupor balancingservice forthe intermittent, volatile,and unreliableoutput ofwindturbines.

Providingbalancingandbackupcapabilityfor intermittent,volatile,andunreliablewindturbineoutput involvescostthat isproperlyconsideredapartofthecostofelectricityfromwind. Forexample,unitsthatareavailableforrampingupmustberunningatlessthanfullcapacityand,therefore,atlessthanfullefficiency. Unitsthatarerampeddownalsorunatlessthanfullcapacity. Unitsthatareavailabletobringonlinearelikelytobe

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running in spinning reservemode (i.e., connected to and synchronized withthe gridbutinputtinglittleornoelectricity)andusingsomefuelandputtingoutsomeemissions.Thesecostsarereallyapartofthetruecostofelectricityfromwind.

Furthermore,ifadequatecapacityfromreliablegeneratingunitsisnotavailable,backupcapacity would have to be constructed resulting in additional costs that are, at some

point,passed

on

to

customers.

It

must

always

be

recognized

that

wind

turbines

do

not

provide reliable, dispatchable generating capacity and they cannot be counted as asubstituteforsuchreliablecapacity.

B. Wind farmsplace an extra burdenongridmanagers. Grid managers face a moredifficult task in keeping grids in balance when winds are sufficient to permit windturbinestoproduceelectricity. Becausetheoutputfromwindturbinesvarieswithwindspeed, the output that must be managed is volatile. The extent of the burden differswidely amongwindfarms and among grids depending on many factors,such as theenergy source mix of generating capacity in the control area, the amount of wind

generation

and

its

volatility,

and

electricity

demand.

The challenges of integrating into electric grids the intermittent, volatile andunreliableoutputfromwindturbineshasfinallybeenacknowledgedbytheChairmanofFERCinaJanuary21,2010,statement31announcingaFERCNoticeofInquiry.32 Hopefullythis proceeding will lead to greater official and media candor about the challenges ofintegratingtheoutputofwindfarmsintoelectricgrids.

C. Electricity fromwind results in higher costof transmission. Areas where winds aresometimes strong enough to power wind turbines are often located at considerabledistance from areas where electricity is needed (i.e., load centers). Furthermore,

windfarms

are

not

welcome

near

residential

areas,

even

if

wind

conditions

may

be

adequate, because of the large size of the wind turbines (400+ feet or more than 40stories tall), because of their noise and other nuisance impacts, because of theirenvironmental damage, and because of their adverse impacts on neighbors propertyvalues.

Theneteffectoftheaboveconditionsisthatelectricityfromwindturbinesentailshighcosts of transmitting that electricity to the areas where the electricity can be used.Threefactorsareinvolved:

1.

First,

because

wind

farms

are

likely

to

be

located

at

some

distance

from

load

centersthelossesduringtransmission(i.e.,linelosses)tendtobehigherthaninthecaseofelectricitygeneratedbyunitsclosertoloadcenters.

31 http://www.ferc.gov/news/statements speeches/wellinghoff/2010/012110wellinghoffE4.asp.

32 http://www.ferc.gov/whats new/commmeet/2010/012110/E4.pdf.

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2. Second, wind farms make inefficient use of transmission capacity. Enoughtransmission capacity must be available to serve the full rated output of a windfarm. However, because wind turbines produce at full rated capacity only whenwindspeedsareabout32MPHorhigher,thefulltransmissioncapacity isusedonlyon a minority, parttime basis. The effect of this is that the unit cost per kWh ofmoving the electricity that is produced tends to be higher than for electricity from

reliablegenerating

units.

3. Third,andespeciallycostly,isthefactthatwindfarmshavebeenbuiltorarebeingproposed in areas that have insufficient or no transmission capacity to move theelectricity that is produced. This means that expensive new transmission capacitywouldhavetobebuiltjusttoaccommodatetheneworproposedwindfarms.

Someareaswheresubstantialwindgeneratingcapacityhasbeenbuiltorisproposedrequire major increases in transmission capacity (e.g., Texas) to serve the windfarms. While the cost of building the additional capacity is clearly a cost that is

properly

attributed

to

the

cost

of

the

electricity

from

wind,

the

wind

industry

seeks

toavoidthiscostandhaveitallocatedtoi.e.,chargedto electriccustomersasapart of their month bills as if it is a normal part of the cost of providing theirelectricservice.

Sadly,somepublicutilityregulatorshaveaccededtothewishesofthewindindustry.Billionsofdollarsare involvedbutthewind industry and utility commissionershidethe enormity of the costs by spreading them over all the electric customers in thearea. Onceagain,regulatorsareprovidinganotherhugesubsidytothewindindustryratherthanprotectingelectriccustomers.

POINT6:

Noone

really

knows

the

true

cost

per

kilowatt

hour

(kWh)

of

electricity

from

wind turbines because all estimates of such costs are based on highlyquestionableassumptionsreallyguessesthatareuntested.

Manyclaimsaremadeaboutthecostperkilowatthourofelectricityproducedfromwindbut,infact,noonereallyknowsthetruecost.

Anyoneinterestedinthefactsshouldbeverywaryofclaimsmadebythewindindustry,itssupporters employed by the federal and state governments, the DOE NationalLaboratories or other wind energy advocates. Data reported by the media are invalid

because

they

typically

are

parroted

from

one

of

these

sources.

A true, meaningful calculation of the cost of per kWh of electricity produced by windturbinesinevitablyrequiresdatathatcanbeknownonlyonanafterthefactbasis. Claims

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that have been made about costs per kWh of electricity from wind turbines are roughestimatesbasedonassumptions(guesses)andoftendonotincludeallelementsofcost.33

Keyfactorsthatcannotbeknowninadvanceincludeatleastthefollowing:

Totaloperatingandmaintenance(O&M)andreplacementcostsduringtheassumedlife

of

the

turbines.

Useful,productivelifeoftheturbine(s). Amountofelectricity(kilowatthourskWh)thatwillbeproducedduringtheuseful

life,takingintoaccountturbineandequipmentoutofservicetime,anddeteriorationinoutputasturbines,bladesandotherequipmentage.

Decommissioningcosts.NoneofthewindturbinesofthetypenowbeinginstalledintheUShaveoperatinghistorieslongenoughtoprovidevalid,reliableestimatesforthesefactors.

Claimsthat

are

made

by

wind

energy

advocates

typically

include

assumptions

about

O&M

costsandreplacementcosts,usefullife(oftenassumedtobe20years),andcapacityfactor(oftenassumedtobesomethingintherangeof25%to35%).

TwohighlysimplifiedexamplesillustratetheextenttowhichcostperkWhcalculationscanbemisleadingifbeforethefactguessesproveincorrect. Inthesesimplifiedexampleswhichuses a rough estimate of one element of cost (i.e., overnight capital costs), only one keyfactortheestimatedusefullifeoftheturbines ischangedbuttheimpactoncostperkWhisdoubled.

Example#1 Example#2Capacityof"windFarm"(kW) 50,000 50,000

AssumedCapacityFactor 30% 30%

AnnualElectricityProduction(kWh) 131,400,000 131,400,000

AssumedUsefulLife 20years 10years

ElectricityProducedDuringUsefulLife(kWh)

(131,400,000xyearsofusefullife)2,628,000,000 1,314,000,000

OvernightCapitalCost $100,000,000 $100,000,000

OvernightCapitalCostperkWhDuringUsefulLife $0.038perkWh $0.076perkWh

There is one potentially promising development in the long standing saga of DOENRELmisinformationaboutthecostperkWhofelectricityfromwind. Thatis,ahighlymisleading,fact less, assumption based graph showing an 80% decline in the cost of electricity from

33 Forexample,seeHarper,John,MattKarcher,MarkBolinger.2007.WindProjectFinancingStructures:AReview

&ComparativeAnalysis.LBNL63434.Berkeley,Calif.:LawrenceBerkeleyNationalLaboratory. http://eetd.lbl.gov/EA/EMP/reports/63434.pdf. SeeTableB1,page61inAppendixBfordetailedlistofcosts.

19
http://eetd.lbl.gov/EA/EMP/reports/63434.pdfhttp://eetd.lbl.gov/EA/EMP/reports/63434.pdfhttp://eetd.lbl.gov/EA/EMP/reports/63434.pdfhttp://eetd.lbl.gov/EA/EMP/reports/63434.pdfhttp://eetd.lbl.gov/EA/EMP/reports/63434.pdf


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windwithfurtherdeclineslikely apparentlyhasbeenabandoned. EventhehighlybiasedDOEEERE folks admit that their data show the cost per kWh of electricity from wind hasbeen rising, not falling.34 Unfortunately, there seem to be hundreds of reporters whorememberthemisleadinggraphandfalse80%declineclaimandwillcontinueparrotingthatclaimforyearstocome.

THE PRECEDING POINTS ARE FOCUSED ON FINANCIAL COST AND VALUE, NOTEXTERNALITIES

Theforegoingdiscussionhasbeenfocusedonthefinancialcostsofproducingelectricityandthefinancialvalueofthatelectricity. Ithasnotdealtwithexternalcosts,commonlyreferredtoasexternalities;i.e.,thecostsnotreflectedinthepricechargedfortheelectricity.

A discussion of externalities associated with each source of energy used to produceelectricity is far beyond the scope of this paper. However, it should be noted that windenergyadvocatesgenerallyassignhighexternalityvaluestoothersourcesofenergywhile

assigningnone

for

wind

energy.

In

fact,

producing

electricity

with

wind

energy

does

impose

externalcosts,includingadverseimpactsonenvironmental,ecological,scenic,andpropertyvalues.

Examples of adverse environmental and ecological impacts include noise, dead birds andbats, destruction of vegetation and disruption of ecosystems and wildlife habitat, andnuisanceimpactssuchasshadowflicker. Claimsthatwindfarmsdonotadverselyaffectneighbors property values, such as those made recently in a report from the LawrenceBerkeleyNationalLaboratory(LBNL)defycommonsenseandfactsevidentfromaroundtheworld.

Fortunately,mediastoriesreportingontheadverseimpactsofwindfarmshavebeguntoappearinthemediaandevenintheJournaloftheAmericanBarAssociation.35

CONCLUSIONS

Therearenolongeranyseriousquestionsbutthat:

1. Windindustryofficialsandlobbyistscontinuetounderstategreatlythefull,truecostof electricity from wind and have been successful in creating a false popular

wisdom

about

wind

energy.

2. The public, media and government officials have been misled and repeat false andmisleadingclaims.

34 DOE,2008WindTechnologyMarketReport,July2009,Figure13,page26.

35 http://www.abajournal.com/magazine/article/the_war_of_winds/.

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3. Government officials particularly legislators and regulators are providing taxbreaks and subsidies for wind energy without understanding or considering thebenefits and costs of their actions, and they are helping to hide costs in tax andelectricbills.

4. Governmentagencies,includingtheUSDepartmentofEnergy(particularlyitsOfficeof

Energy

Efficiency

and

Renewable

Energy

DOE

EERE),

the

DOE

National

Laboratories (particularly NREL and LBNL), other DOE contractors, and stateenergy agencies and public utility commissions are conducting and supportingactivities and issuing information about wind energy that helps mislead the public,mediaandpoliticalleaders.

5. Claims that the hundreds of millions of tax dollars being thrown at wind farmprojectsareanefficientandeffectivewayofcreatingjobsintheUSareFALSE. (Thefactthatalargeshareofthosetaxdollarsareflowingtoforeigncountries turbinemanufacturers and wind farm owners should be a clue that would give some

pause

to

Obama

Administration

officials

and

members

of

Congress.)

6. Someinvestorsinwindfarmsarehighlylikelytobemakingfinancialcommitmentswithoutunderstandingthefactsaboutthehightruecostandlowvalueofelectricityfromwind.

7. Landownersareleasinglandtowindfarmdeveloperswithoutunderstandingtheadverse impactthat wind turbines have on environmental, ecological, scenic andneighborspropertyvalues.

8. Localgovernmentofficials,misledbywindfarmdevelopersandluredbypotentialshort

term

financial

benefits,

are

fracturing

their

communities,

destroying

home

owners property values, and ignoring longterm costs when they encourage orcondonewindenergyprojects.

9. Energy economists and analysts in government and the private sector, as well asreporters and editors, need a far better understanding of the facts about windenergycostandvaluesthantheyhavedisplayedthusfar.

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GlennSchleede is semiretired after working onenergy matters formorethan 30 years ingovernment and the private sector. He often writes about energy issues, particularly aboutpoliciesandactionsthatadverselyaffecttaxpayersandconsumers.

22

Documents

High Cost and Low Value of Electricity From Wind