wind energy

Production Tax Credit: High Cost Subsidy for Low Value Power

by Marlo Lewis on October 29, 2012

in Blog, Features

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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.

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When The Wind Blows Too Hard

by Brian McGraw on July 13, 2011

in Blog

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For some reason, utility contracts in Scotland are written such that companies are paid for energy that the utility cannot use. In this case, The Telegraph estimates that the payments were worth up to 20 times the actual value of the electricity under normal conditions:

The payments, worth up to 20 times the value of the power they would have produced, raises serious concerns about such subsidies, which are paid for by the customer.

The six Scottish wind farms were asked to stop producing electricity on a particularly windy night last month as the National Grid was overloaded.

Their transition cables do not have the capacity to transfer the power to England and so they were switched off and the operators received compensation. One operator received £312,000, while another benefited by £263,000.

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Global Warming: Good for Bad, Bad for Good — Except (Surprise!) Wind Energy

by Marlo Lewis on May 3, 2011

in Features

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If you’ve been following the global warming debate for any length of time, you know how boringly predictable the “consensus” narrative has become. Global warming is good for bad things — poison ivy, ticks, toxic algae blooms, malaria-carrying mosquitoes — but bad for good things — polar bears, ski resorts, Vermont’s maple sugar industry, and the weather patterns on which agriculture (hence human survival) allegedly depend.

And supposedly, one of the cures for global warming is to “repower” America with zero-carbon energy, especially electricity generated from wind turbines.

But that creates a bit of a conundrum for warmists. If global warming is going to play havoc with the weather, how do we know that the best locations for siting wind farms today will remain optimal (or even marginally productive) in the allegedly topsy turvy greenhouse planet of tomorrow?

Never fear! A new study funded by the National Science Foundation finds that global warming will not significantly change America’s wind patterns over the next 50 years.   [click to continue…]

The DOE’s Awful Green Bank

by William Yeatman on February 18, 2011

in Blog

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My CEI colleague Chris Horner and I have a piece in today’s Daily Caller, on the Department of Energy’s awful green bank.

This excerpt aptly summarizes out take:

The point of a green investment bank is ostensibly to facilitate the commercialization of new, dormant or otherwise commercially unsuccessful technologies by providing easier financing than is available in the real world, where people scrutinize where they invest their money. It turns bureaucrats into bankers, but with your money, and no real-world incentives to “invest,” as the word connotes and denotes.

Critics argue that these bureaucrats are picking winners and losers. If only. In fact, they just pick from losers.

I especially like that last line, about how the green energy industry is a loser. As Chris and I have explained elsewhere, any industry, like green energy, that owes its creation to government handouts is fundamentally uncompetitive, and, therefore, will always be on the taxpayer dole.

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Wind Energy Lobby Kindly Proves My Point

by William Yeatman on December 8, 2010

in Blog

Two weeks ago, my colleague Chris Horner and I coauthored an oped about the renewable energy industry’s dependence on taxpayer subsidies. To make our point, we listed a number of examples of renewable energy executives warning that massive layoffs were imminent, unless the Congress passed or renewed green energy giveaways.

-Biomass Power Association President Robert Cleaves (February 2010): “Thousands of jobs in the biomass power industry could be lost if Congress fails to extend the production tax credit.”

-American Wind Energy Association CEO Denise Bode (July 2010): “Manufacturing facilities will go idle and lay off workers if Congress doesn’t act now” to impose a federal mandate for electricity produced by AWEA members.

-Solar Energy Industry Association President Rhone Resch (September 2008): “Unless Congress promptly returns to complete their unfinished business, the solar industry will suffer with the loss of 39,000 jobs.”

-Renewable Fuels Association CEO Bob Dinneen (November 2010): “Allowing the tax incentive to expire would risk jobs in a very important domestic energy sector and across rural America.”

Currently, the Congress is deliberating whether or not to extend a particularly generous subsidy that was established by the American Recovery and Reinvestment Act, a.k.a. the stimulus. It’s called the Treasury Department section 1603 tax credit, and it allows renewable energy projects to receive up to 30% of their capital costs up front. The Congress created this subsidy because the 2008/2009 financial crisis rendered ineffective the production tax credit, which had been the renewable energy industry’s primary means of remaining economically viable. The production tax credit was based on corporations having profits and therefore a tax liability. The financial crisis, of course, wiped out corporate profits. So the Congress included the section 1603 program in the stimulus. Now, the renewable energy industry wants to keep both subsidies alive. When it comes to government goodies, the more the merrier.

In this context, the American Wind Energy Association yesterday issued a press release that lends further credence to the point made by Chris and me in our oped. Consider,

TENS OF THOUSANDS OF LAYOFFS IN AMERICAN WIND ENERGY SEEN AT STAKE IN TAX EXTENDER PACKAGE

In the process of preparing year-end numbers on the industry, the American Wind Energy Association reports that tens of thousands of Americans could lose their jobs or not get called back from layoffs without the 1603 investment tax credit for renewable energy that hangs in the balance as Congress and the White House work to settle a tax package.

“We have people being laid off right now, and we expect to see more without fast action on the tax extenders now being negotiated,” said Denise Bode, CEO of AWEA. “The 1603 tax credit extension would help bring them back as soon as possible.” According to the trade group’s research, there are over 15,000 jobs in the manufacturing pipeline alone. “We are risking those jobs by not sending a clear signal that America remains open for business in wind energy,” Bode said.

The 1603 tax investment credit saved 55,000 jobs in wind energy, as estimated by Lawrence Berkeley National Laboratory. Overall employment has reached 85,000 in the American wind industry, as installed capacity has grown 40 percent in each of the past two years. Wind now generates 20 percent of the electricity in Iowa; and on Oct. 28, high winds pushed wind power to 25 percent of the electrical generation in Texas.

As Chris and I conclude,

Of course, it is only natural for aid-dependent industries to warn that they would suffer without the continuation of aid. Employing this circular logic, taxpayer funded renewable power has remained the “energy of the future” for decades. But American taxpayers simply cannot afford to subsidize industries that are forever-nascent.