Who knew a “free” source of energy could be so expensive?
The Electric Reliability Council of Texas (ERCOT) recently estimated that billions of dollars in investment will be needed to transmit wind-generated electricity from the areas of Texas most suitable for wind generation — West Texas and the Panhandle — to the areas of the state that need energy the most — the I-35 corridor and the upper Gulf Coast. These costs will be borne by Texas ratepayers. How did this happen?
Subsidies, incentives, and renewable energy mandates have paved the way for Texas’ wind-energy boom. Today, Texas leads the nation in installed wind-power capacity, adding 1,708 megawatts (MW) in 2007, bringing its total to 4,446 MW by the end the year. California is a distant second, with 63 MW added in 2007 and a total of 2,439 MW by year’s end.
According to the Energy Information Administration, wind’s percentage of total U.S. net generation was 0.44 percent in 2005, 0.65 percent in 2006, and 0.77 percent in 2007; from 1993 to 2007, wind’s average percentage of total net generation was 0.25 percent. In Texas, wind accounted for 2 percent of total generation in 2007.
Robust wind power expansion is expected, as Texas’ Senate Bill 20 (2005) mandated 5,880 MW of renewable energy by 2015 and set a 10,000-MW target for 2025. To this end, $700 million went into new wind Texas farms in January, thanks in part to government subsidies.
In addition to generous federal assistance — namely a 2 cents/kWh production tax credit and five-year, double-declining balance accelerated depreciation for wind-generating equipment — the state of Texas entices wind developers with a franchise tax exemption to manufacturers, sellers, or installers of wind devices; a corporate deduction from the state’s franchise tax for renewable energy sources; and a 100-percent property tax exemption on the appraised value of an on-site wind power generating device. But even with these federal and state subsidies, electricity from wind is more expensive per kilowatt-hour than that generated by fossil fuels.
ERCOT’s estimates for transmitting West Texas wind energy, under four different scenarios, range from $3.78 billion to $6.28 billion. ERCOT estimated costs by using as-the-crow-flies distances for transmission cables. Thus, transmission costs were estimated using a best-case-scenario approach and, as such, should be considered the absolute (and unlikely) minimums. Add to this ERCOT’s estimates of $410 million to $1.03 billion for connecting wind generation to the new collection substations.
Additionally, while ERCOT’s transmission-cost estimates include the costs of building transmission stations, they do not include right-of-way costs, which will be passed through to consumers, in the form of higher electric bills.
Wind energy proponents extol wind as free, safe, and clean, but these characterizations miss the point. Energy users expect reliability, and challenges dot the path from wind to electric grid to energy consumer.
For wind turbines to produce power, the wind must blow. Because the wind does not blow constantly, wind turbines produce a fraction of their potential generating capacities. Furthermore, winds blows the least during the summer months when electricity is needed the most. ERCOT relies on just 8.7 percent of wind power’s capacity when determining available power during peak summer hours. Also, due to wind’s intermittency, those relying on wind farms must rely on conventional power sources to back up their supply.
Wind’s variability and its lack of correlation with peak demand highlight a major challenge for wind energy: Presently, there is no adequate storage system for wind-generated electricity — though progress is being made on updating older technologies, and on refining newer ones. Until commercially viable storage is a reality, wind energy will remain unreliable.
Wind energy also comes with legitimate environmental concerns. Sterling Burnett, Senior Fellow at the National Center for Policy Analysis, writes, “Bringing a conventional power plant on line to supply power is not as simple as turning on a switch; thus most of the fossil fuel power stations required to supplement wind turbines are not ‘redundant,’ but must run continuously, even if at reduced levels. When combined with the CO2 emitted and pollutants released in the manufacture and maintenance of wind towers and their associated infrastructure, substituting wind power for fossil fuels does little to reduce air pollution.”
Wind farms also require vast tracts of land, disrupting farming acreage and animal habitats; and, as Sterling Burnett has pointed out, turbine blades kill thousands of birds each year, including protected species.
ERCOT estimates Texas’ electricity demand will rise 20 percent by 2015 and 43 percent by 2025. Wind alone cannot supply that. Rather, wind should be part of a diversified portfolio of energy resources, anchored by the traditional energy sources — like fossil fuels, which are burning cleaner than ever before — that have the best chance at meeting Texas’ burgeoning energy needs. Even in Texas, the nation’s leader in wind energy, wind tinkers at the edges of meeting our energy needs. Letting wind find and fulfill its reasonable supply potential — as opposed to subsidizing and overfilling the wind-energy egg basket — is the prudent strategy for finding the proper role for wind energy.
– Drew Thornley is a natural resources policy analyst at the Texas Public Policy Foundation and a Planet Gore contributor.