February 13, 2007
Editor, Wall Street Journal
The Wall Street Journal’s February 12 article, “The New Math of Alternative Energy,” is deficient in many respects. Unlike its purported objective, the article does not provide a sound analysis of whether “going green” makes “economic sense.” The section on “wind energy,” for example, has four major deficiencies.
First, when attempting to compare the costs of electricity from various energy sources, the article fails to recognize that electricity produced from wind has less value than electricity produced from reliable generating units. Specifically:
a. Electricity must be produced at all times in the amounts required to meet customers’ demands because electricity cannot be stored in any appreciable amounts. In order to keep electric grids in balance in terms of supply and demand, grid managers must be able to control the output from generating units supplying the grid. Generating units subject to increased or decreased electricity production on command are called “dispatchable” units.
b. Wind turbines are not “dispatchable.” They produce electricity only when the wind is blowing within the right speed range. Their output is intermittent, volatile, and unreliable. Furthermore, wind turbines are most likely to produce at night and in winter when winds tend to be strongest – not on hot weekday summer afternoons in July and August when electricity demand is highest and electricity has its highest value.
c. Because wind turbines cannot be counted on to produce when electricity demand reaches its highest levels, they have virtually no “capacity value” to grid managers. Therefore, areas experiencing significant electricity demand growth will have to add reliable, dispatchable generating units whether or not they add wind turbines.
Second, the article purports to compare costs of electricity without acknowledging the full costs of electricity from wind. The article mentions only one of the huge federal tax breaks available to “wind farm” owners. There are many other tax breaks and subsidies. On a per kilowatt-hour basis, wind is probably now the most heavily subsidized of all energy sources for generating electricity. Hundreds of millions in tax breaks and subsidies are flowing to “wind farm” owners each year while, according to EIA, wind provided only 36/100 of 1% of US electricity in 2005 and is expected to provide only 89/100 of 1% of US electricity in 2030.
Wind advocates have publicly acknowledged that 2/3 of the economic value of a “wind farm” is from two generous federal tax breaks (i.e., Production Tax Credit and 5-yr 200% declining balance accelerated depreciation), and that tax breaks from some states may be worth another 10%. Subsidies worth additional millions to the wind industry include artificial markets created by state “Renewable Portfolio Standards” and “green energy” programs that permit “wind farm” owners to sell electricity at above market prices. Transmission lines built to serve “wind farms,” but with the costs charged to electric customers, are still another subsidy.
Still another part of the true cost of electricity from wind is the cost of keeping reliable generating units immediately available, but running at less than peak efficiency or in spinning reserve mode, to serve as backup for the intermittent, volatile output from wind turbines so that electric grids can be kept in balance.
Third, the article tacitly accepts spurious claims about the cost per kWh of electricity from wind that are made by the wind industry, IEA or EIA. Valid claims about cost per kWh require knowledge of (a) the capital costs of turbines and associated equipment, (b) the useful life of the wind turbines, (c) the amount of electricity that will be produced each year, and (d) the cost of operating, maintaining, repairing, replacing and decommissioning the “wind farms.”
Except for initial capital costs, all other factors used in estimating costs per kWh of electricity from wind are based on assumptions. In fact, unlike generating units using the “traditional” energy sources, none of the type of wind turbines now being installed have been in service long enough to have reliable track records of even 5 years.
Quite likely, the cost per kWh of electricity from wind cited in the article is based on an assumption that the wind turbines will have useful lives of 20 years. If, however, the useful life turns out to be 10 years rather than 20, only about half the expected number of kWh will have been produced. This means that the actual cost per kWh will be approximately twice the cost often claimed by wind advocates when they assume a 20-year useful life. Furthermore, “wind farm” owners will have less incentive to spend the money required to maintain wind turbines once the highly lucrative tax breaks run out (i.e., after 5 and 10 years), and costs of maintaining the aging turbines rise. Owners may even find it more advantageous to sell or abandon the turbines rather than spending the money needed to keep their performance from deteriorating.
Fourth, the article fails even to mention the adverse environmental, ecological, scenic and property value impacts of wind farms – all of which are key factors in the growing opposition to the construction of wind farms in the US – from Maine to Texas and Virginia to California and Washington – as well as in Europe.
Wall Street Journal readers deserve a higher quality of current research, objective analysis and discernment than is reflected in the “New Math” article.
Sincerely,
Glenn R. Schleede
18220 Turnberry Drive
Round Hill, VA 20141-2574
540-338-9958
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