The wind energy production tax credit (PTC) expires at the stroke of midnight, Dec. 31, unless Congress votes to renew the tax break. A one-year extension would add an estimated $12.1 billion to deficit spending over 10 years. A six-year extension, advocated by the wind industry, could add $50 billion.

The fiscal cliff looms and the national debt already exceeds GDP, but if Congress cared more about the general interest of taxpayers than about the special interests of campaign contributors, the nation would not be sliding towards insolvency.

Whether Congress should renew the PTC or let it expire is the topic of this week’s National Journal Energy Experts Blog. Twenty wonks weigh in, including your humble servant. I heartily recommend the contributions by Sen. Lamar Alexander (R.-Tenn.), Craig Rucker, Phil Kerpin, Benjamin Zycher, Thomas Pyle, James Valvo, and David Banks.

My contribution addresses the environmental side of the debate, in particular the claim that recent extreme weather events demonstrate “just how badly our nation needs to take advantage of our vast wind energy potential,” as one contributor put it.

Below is a lightly edited version of my comment.

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Of all the lame arguments used to sell Americans on the proposition that wind power, an industry propped up by Soviet-style production quota in 29 states and numerous other policy privileges, deserves another renewal of the 20-year-old production tax credit (PTC), the lamest is the claim that the PTC helps protect us from extreme weather.

PTC advocates talk as if Hurricane Sandy and the Midwest drought were obvious consequences of anthropogenic global warming, and that subsidizing wind energy is a cost-effective way to mitigate climate change.

They are wrong on both counts.

Neither economic analyses nor meteorological investigations validate the asserted link between recent extreme weather events and global warming. When weather-related damages are adjusted (“normalized”) to account for changes in population, per capita income, and the consumer price index, there is no long-term trend such as might indicate an increase in the frequency or severity of extreme weather related to global climate change.

A 2012 study in the journal Climate Change  examined 370 years of tropical cyclone data from the Lesser Antilles, the eastern Caribbean island chain bisecting the main development region for landfalling U.S. hurricanes. The study found no long-term trend in either the power or frequency of tropical cyclones from 1638 to 2009. It did however find a 50- to 70-year wave pattern associated with the Atlantic Multidecadal Oscillation, a mode of natural climate variability.

A recent study in the Journal of Climate similarly found no long-term trend in the strength or frequency of landfalling hurricanes in the world’s five main hurricane basins. The data extend back to 1944 for the North Atlantic, to 1950 for the northeastern Pacific, and to 1970 for the western North Pacific, northern Indian Ocean, and Southern Hemisphere. Among other inconvenient findings: “The U.S. is currently in the midst of the longest streak ever recorded without an intense [category 3-5] hurricane landfall.”

Sandy was not even a category 1 hurricane by the time it made landfall. New York has been hit with more powerful storms at least as far back as the 17^th century. For example, the New England Hurricane of 1938 was a category 3 that killed 600 people. Carbon dioxide (CO2) concentrations in 1938 were about 310 parts per million (ppm), well below the level (350 ppm) advocated by NASA scientist James Hansen, activist Bill McKibben, and Al Gore as the upper limit consistent with climate stability.

What made Sandy so destructive was the hurricane’s merging with a winter frontal storm to produce what MIT climatologist Kerry Emanuel calls a “hybrid” storm. The usual suspects, of course, were quick to suggest that any such ‘freak of nature’ must be man-made. That is speculation, not science. In Emanuel’s words:  “We don’t have very good theoretical or modeling guidance on how hybrid storms might be expected to change with climate. So this is a fancy way of saying my profession doesn’t know how hybrid storms will respond to climate [change]. I feel strongly about that. I think that anyone who says we do know that is not giving you a straight answer. We don’t know.”

As for the Midwest drought, if it were a symptom of global climate change, then there should be a long-term positive trend in the Palmer Drought Severity Index (PDSI). Instead, as Cato Institute scholars Patrick Michaels and Chip Knappenberger point out, the PDSI from 1895 through 2011 is slightly negative, i.e., the trend is towards a somewhat wetter climate.

But here’s the kicker. Even if one assumes fossil fuel emissions revved up Sandy and the Midwest drought, extending the PTC for another year – or even another six, as advocated by the American Wind Energy Association – would provide no protection from climate-related risk.

Using IPCC climate sensitivity assumptions, Knappenberger calculates that even if the U.S. eliminated all CO2 emissions tomorrow, the impact on global temperatures would be a reduction ”of approximately 0.08°C by the year 2050 and 0.17°C by the year 2100 — amounts that are, for all intents and purposes, negligible.”

The U.S. will continue to emit billions of tons of CO2 annually for decades whether Congress extends the PTC or not. Hence even under IPCC climate sensitivity assumptions, the PTC is climatologically irrelevant and can provide no meaningful protection from extreme weather events.

Extending the PTC for one year could increase the national debt by $12.1 billion. A six-year extension could add more than $50 billion to the debt. As global warming policy, the PTC is all taxpayer pain for no climate gain.

“Remove Big Wind’s training wheels” and let the production tax credit (PTC) expire, argues University of Lousiana State University Professor David Dismukes in a report published by the American Energy Alliance (AEA), a grassroots free-market research and advocacy group.

Wind energy lobbyists and their congressional allies are pushing for a one-year extension of the PTC, first enacted in 1992. The Joint Committee on Taxation estimates the one-year extension would increase the cumulative federal deficit by $12.2 billion over the next 10 years. Wind industry lobbyists warn that not renewing the PTC would kill jobs. One could reply that jobs dependent on market-rigging tax breaks impose a net loss on the economy and should not be created in the first place.

The AEA report, however, does not take this tack. Rather, the report argues that wind doesn’t need the PTC because it is already competitive and will become more so as efficiencies improve. For example, the report cites a Breakthrough Institute estimate that unsubsidized wind costs $60 to $90/MWh, which “compares favorably with new combined cycle natural gas generation, at around $52 to $72/MWh,” making wind generation “likely already competitive with natural gas in areas that have high wind speeds.”

I’m not persuaded because, as explained in other posts, a megawatt of unpredictable, unreliable wind capacity has less value than a megawatt of predictable, reliable natural gas or coal capacity. Nonetheless, the AEA report presents several criticisms of the PTC that strike me as spot on, three of which are discussed below.

First, the claim that wind is still an “infant industry” in need of special tax coddling doesn’t pass the laugh test. Wind has grown from just eight megawatts (MW) of installed nameplate capacity in 1980 to 50,000 MW as of Aug. 2012, and in 2011, wind power represented 45% of all new generation under consideration by regional interconnection organizations, independent system operators, and utilities. This industry has outgrown any plausible need for training wheels.

Second, because 30 states and the District of Columbia have renewable portfolio standards (RPS) programs that establish Soviet-style production quota for renewable electricity (see map below), the long-term growth of wind energy is guaranteed regardless of whether Congress extends the 20-year-old PTC or lets it expire:

Data confirms that these state renewable mandates not only drove the explosion of wind generation capacity development [a nearly five-fold increase from 2006 to 2011], but also established a guaranteed increasing future market for wind energy anticipated to triple in size by 2030 even if the federal PTC expires. The U.S. Energy Information Administration (“EIA”) forecasts that even if the PTC and other incentives are eliminated, renewable generation will still be on track to rise from 500 billion kilowatthours (“kWhs”) in 2011 to approximately 750 billion kWhs by 2035 (or a 50 percent increase in wind generation). This is a guaranteed increase in market share, even without the federal wind PTC, that is not offered to any other type of traditional power generation technology such as natural gas, coal, or nuclear.

Wind accounts for 90% of all renewable energy developed under state RPS programs. At a recent Platts Financing U.S. Power conference, a Standard & Poor analyst estimated that even without the PTC, state RPS programs would generate about $150 billion in contracts over the next 10 years. If future RPS targets are met with wind, installed capacity will more than double from today’s 50 MW to 127 MW by 2035 (see chart below). Offering an additional $12.2 billion in tax breaks on top of the guaranteed markets created by RPS programs would allow this pampered industry to “double dip” at the corporate welfare trough.

Third, the PTC is inequitable, a hidden wealth transfer from taxpayers who live in states with little or no wind energy development to ratepayers in states with the most stringent renewable energy mandates:

Notably, over 50 percent of currently-active wind capacity is located in only five states; over 75 percent is located in just 11 states. Under the federal wind PTC, however, taxpayers in the states without RPS mandates pay approximately 24 percent of the PTC funding, even though they receive no direct economic benefit. As such, the current federal PTC structure unfairly shifts the cost of wind energy development from taxpayers in the RPS states to those with little or no wind development, forcing taxpayers across the country to support an industry concentrated in a few states.

In Wind Intermittency and the Production Tax Credit: A High Cost Subsidy for Low Value Power, economist Jonathan Lesser finds that “the vast majority of the Nation’s wind resources fail to produce any electricity when our customers need it most.” He also cautions that the wind energy production tax credit (PTC), which would add $12.2 billion to the federal deficit if Congress extends it for another year, adds billions of dollars in hidden costs to ratepayers “while undermining the reliability of the grid.”

Lesser’s analysis is based on nearly four years of data from three interconnection regions that account for over half of total U.S. installed wind capacity: Electric Reliability Council of Texas (ERCOT— over 10,000 MW of wind capacity), the Midwest ISO (MISO — almost 12,000 MW of wind capacity), and PJM Interconnection (PJM — over 5,000 MW of wind capacity).

In all three regions, over 84% of the installed wind generation infrastructure fails to produce electricity when electric demand is greatest.

In MISO, only 1.8% to 7.6% of wind infrastructure generated power during the peak hours on the highest demand days. In ERCOT, 6.0% to 15.9% of installed wind generated power, and in PJM, between 8.2% and 14.6% of wind produced power.

Demand for electricity is highest in the summer, especially during heat waves. But that is often when the wind stops blowing. The July 2012 heat wave is a case in point:

The July 2012 heat wave in Illinois, where temperatures soared to 103 degrees in Chicago, provides a compelling example of wind generation’s failure to perform when needed most. During this heat wave, Illinois wind generated less than 5% of its capacity during the record breaking heat, producing only an average of 120 MW of electricity from the over 2,700 MW installed. On July 6, 2012, when the demand for electricity in northern Illinois and Chicago averaged 22,000 MW, the average amount of wind power available during the day was a virtually nonexistent 4 MW.

Comparisons of the “levelized cost” of different electric generation technologies can make wind look more competitive than it is. “Levelized cost represents the present value of the total cost of building and operating a generating plant over an assumed financial life and duty cycle, converted to equal annual payments and expressed in terms of real dollars to remove the impact of inflation,” explains the U.S. Energy Information Administration (EIA). But in the case of wind, there are additional costs that aren’t factored in. Those may include the cost of building and operating fossil fuel generation for backup when the wind doesn’t blow, and the cost of building new transmission lines to bring electricity from mountain passes or other wind rich areas to distant load (demand) centers.

Moreover, as the EIA acknowledges, since load and supply ”must be balanced on a continuous basis, units whose output can be varied to follow demand generally have more value to a system than less flexible units or those whose operation is tied to the availability of an intermittent resource,” such as wind. That the PTC subsidizes an underperforming, low-value source of electric power is the main thrust of Lesser’s analysis.

Electricity is the ultimate “just-in-time” resource. Because electricity cannot be stored cheaply, the power system requires resources that produce electricity when called upon. Conventional power plants — nuclear, coal, gas — as well as hydroelectric dams that store water, are the backbone of the electricity system because they share two critical characteristics: predictability and reliability. Absent rare equipment failures, they run reliably whenever needed. In stark contrast, as previously described, wind generation is neither predictable nor reliable. The evidence demonstrates that wind is not available when customers need electricity and no one can predict whether or when the wind will blow a week from today, let alone a year from today.

An electric power station that fails to produce during a heat wave is like metro service that’s available except when you need to get to work. Neither is of much value, regardless of how ’competitive’ the rates may seem. Lesser finds that ”both on an hourly and seasonal basis, wind generation follows this adverse, low value pattern, displaying a strong negative relationship between hourly load and hourly wind generation, that is, the greater the load, the less wind generation.” The chart below shows the gaps between load and wind generation during July 1-8, 2012 for PJM, a region encompassing all or part of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.

In all three regions over the four-year study period, “the highest relative amount of wind generation occurred when loads were lowest, and the smallest amounts of wind were available when loads were greatest in Summer,” though the Summer “load — wind gap” was particularly pronounced in PJM.

The PTC is an egregious case of government waste. It “forces taxpayers to spend billions of dollars for a generating resource that produces the least amount of electricity when it is most valuable and most needed. That is like asking someone to pay for a taxi that does not show up when it’s raining.”

Wind energy advocates often point out that a State, the U.S., or the entire world has enough wind energy to supply all of its electricity needs many times over. Writing in Scientific American, for example, Mark Jacobson and Mark Delucchi note that the world in 2030 is projected to consume 16.9 trillion watts (terawatts, or TW) of power, with about 2.8 TW consumed in the U.S. Total wind flows worldwide generate about 1,700 TW, and accessible wind resources total an estimated 40-85 TW. 

Based on such math, the American Wind Energy Association (AWEA) argues, for instance, that Arizona has enough wind to meet 40% of its electricity needs, Michigan wind resources could meet 160% of the State’s electricity needs, and wind in Oklahoma could provide nearly 31 times the State’s electricity needs. Yet despite ratepayer subsidies, special tax breaks, and renewable energy mandates and goals in 37 States, wind supplied 2.2% of total U.S. electric generation in 2010. Why don’t we get lots more of our electricity from this ’free,’ ‘non-polluting’ ‘renewable’ source?

The chief impediments are wind energy’s inherent drawbacks. First, wind energy is intermittent — at any given time the wind may blow too hard or too soft or not blow at all. Second, wind is non-dispatchable. When Shakespeare’s Owen Glendower boasted, “I can call spirits from the vasty deep,” Henry Hotspur replied: “Why, so can I, or so can any man; but will they come when you do call for them?” Like Glendower’s spirits, the winds answer to no man. The wind is not ours to ’dispatch’ as electricity demand rises or falls. 

There are three main ways of compensating for wind’s intermittency and non-dispatchability — pumped storage (pump water uphill when there’s too much wind relative to demand; let it run downhill and drive turbines when there’s too little wind), natural gas backup generation, and wind dumping (idle the turbines when demand is low). Incorporating those techniques to keep supply in balance with demand adds to the cost of wind electricity, which is typically more costly than coal- and gas-generated electricity even without storage and backup.

What’s more, according to a new Reason Foundation/Independence Institute report, the storage, backup, and idling costs become prohibitive as wind’s share of total generation increases beyond 10-20%. 

The report, The Limits of Wind Power by William Korchinski, contains several sobering graphics. Figure 6 from the study shows how variable (intermittent) the wind can be, reducing output as much as 16 MW per minute.

The report quotes E.ON, the German power producer that experienced this sudden decline in wind energy during Christmas in 2004:

Whilst wind power feed-in at 9.15 am on Christmas Eve reached its maximum for the year at 6,024MW, it fell to below 2,000MW within only 10 hours, a difference of over 4,000MW. This corresponds to the capacity of 8 x 500MW coal fired power station blocks. On Boxing Day, wind power feed-in in the E.ON grid fell to below 40MW. Handling such significant differences in feed-in levels poses a major challenge to grid operators.

Let’s suppose that some States actually take AWEA’s message to heart and build enough wind capacity to meet 100% of their power needs. To what extent would actual wind generation match electric demand throughout the year? Figure 11 of the study illustrates the results for the PMJ Interconnection region comprising all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. 

As the figure shows, on hundreds of days the PJM region’s turbines would produce either significantly more or significantly less power than customers consume.

As noted above, there are three main ways of dealing with wind’s intermittency and non-dispatchability. One technique is pumped storage: “pumping water uphill when there is excess wind energy, and then running the water downhill through a turbine when wind energy is limited.” The PJM pumped storage capacity for 2010 was about 5,000 MW, compared to the area’s average hourly electric demand of 77,800 MW. In other words, PJM currently has about two hours worth of stored power. That’s okay because the overwhelming lion’s share of the region’s electricity does not come from wind.

But suppose PJM got all of its electricity from wind — what would it take to have enough pumped storage in case the wind doesn’t blow? Korchinski calculates that PJM would need to be able to pump uphill “a body of water that is about 2,000 square miles by 100 feet deep” — the dimensions of Lake of the Woods in Canada.

Since constructing artificial lakes of that size is impractical (and would have significant ecological impacts as well), pumped storage is typically combined with natural gas backup generation and wind dumping. Turbines left idle (dumping) do not generate income. Gas backup means running gas turbines inefficiently, in ”spinning reserve” mode, so they are “ready to increase or decrease power on short notice.” The greater the penetration of wind in the electricity fuel mix, the greater the reliance on wind dumping and gas backup.

Korchinski comments:

As wind penetrations increase, the grid requires increasing amounts of spinning reserves to maintain reliability. At high wind penetrations, even large amounts of power storage cannot prevent significant (and expensive) wind dumping. The already high cost of wind power increases with the construction of storage facilities, and the cost to construct extra wind turbines, which will be dormant during periods of wind dumping.

The takeaway message for policymakers and a public bombarded with propaganda about obtaining 40%, 160%, or even 3100% of a State’s electricity from wind?

Very high wind penetrations are not achievable in practice due to the increased need for power storage, the decrease in grid reliability, and the increased operating costs. Given these constraints, this study concludes that a more practical upper limit for wind penetration is 10%.

Media mogul and climate alarmist Ted Turner addressed the American Wind Energy Association’s annual gala this week. The highlight of his speech, as reported by the Huffington Post, was when he told the audience, “Let’s go out and kick their asses. That’s what they need, a good ass-kicking.” The antecedent of “their” and “they” was the coal industry.

Turner’s machismo seems to have been lost on the wind folks. The day after Turner called for an ‘ass-kicking,’ AWEA representatives held a conference call with reporters, in order to publicize their plea for an early extension by the Congress of the Production Tax Credit, the lifeblood subsidy of the wind industry. Without this ultra-generous taxpayer give-away, there would be no wind industry in America, because there isn’t a utility in the country that would pay full cost for intermittent, expensive energy.

Needless to say, Ted Turner’s tough talk comports poorly with the AWEA’s begging for a handout.