AWEA Blog - IER turns back on facts, bashes wind energy

The petro-funded "Institute for Energy Research" is at it again, this time with a half-baked analysis of the U.S. Department of Energy's 20% Wind Energy by 2030 Technical Report ("20% Report”) that was completed in 2008 under the Administration of President George W. Bush.

Here are some facts that IER chose to overlook:
Is the 20% target reachable? Yes. The U.S. wind power industry is well ahead of the year-by-year schedule of new capacity additions that the 20% Report outlined in order to reach that level of contribution by 2030. The Report envisioned 300,000 megawatts (MW) of wind farm generation in 2030, and by the end of this year, roughly 50,000 MW, or one-sixth of that total, will be in place. In fact, wind power has accounted for more than a third of all the new electric generating capacity added in America during the past four years.

What do we need to do to reach it? First and foremost, Congress needs to extend the federal wind energy production tax credit (PTC), currently scheduled to expire at the end of 2012, and it needs to do so NOW. Wind power is now an increasingly significant business, and the credit is leveraging $17 billion in private investment annually. The companies that install and operate wind farms, and the manufacturers that make the wind turbines and the thousands of components that go into them, need to know the financial environment they will be operating in going forward. Congress has allowed the credit to expire three times in the past 12 years, and each time the industry has been disrupted, losing vital momentum. (Disruption in the wind power industry is, of course, music to the ears of IER, which receives funding from the fossil fuels industries and would like nothing more than to slow the progress of renewable energy.)

How difficult is it to integrate wind power, a variable energy source, with the existing electric utility system? Not difficult at all. What is achievable was just demonstrated recently by Xcel Energy, a major utility, which set a world record Oct. 6 with 55% of the electricity on its Public Service of Colorado system coming from wind. Utility systems elsewhere, in Spain, Denmark and Ireland, have also recorded very high levels of wind penetration. While wind generation is variable, so is customer demand--it goes up and down during the day as stores and factories open for business, people turn lights on in the evening, and so forth--and so utilities have always had to deal with variations in the amount of electricity they have to supply.

Is the U.S. wind resource large enough to supply 20% of our nation's electricity? Yes. As I mentioned earlier, 300,000 MW of wind would be needed, according to the 20% Report. That is only a small fraction of the total U.S. wind resource (including offshore) of roughly 15 million MW. If there were enough transmission lines in place to carry the electricity, 300,000 MW of wind could be installed in Texas alone. Or Kansas. Or any of several other states. Abundance of wind is the least of our problems.

How much land would be needed for wind power to supply 20% of our nation's electricity? While the boundaries of wind farms may be large, wind turbines actually use very little land. The DOE report found that if wind power provided 20% of America's electricity, the actual space occupied by wind turbines, related equipment such as electrical substations, and service roads would be less than half the size of the city of Anchorage, Alaska. That is because 95 to 98 percent of the land within a wind farm's boundaries remains available for ranching, farming, wildlife habitat, recreation, or other compatible uses. Furthermore, wind's benefits, in the form of land rental payments to farmers, are spread as widely as the turbines, providing badly needed income to rural towns and counties across the U.S. (see "Counting wind power's rural economic benefits: Sherman County, Oregon," May 31).

Would large amounts of public land be needed for wind farms? No. Virtually all (over 98%) of U.S. wind farms in operation today are installed on privately owned land. This is in flat contradiction to IER's claim that "This growth in wind turbine capacity would require siting wind units on publicly owned lands where a large percentage of the development sites are located ..." and gives a clear indication of how its statements cannot be trusted. Where did IER get its false information? The statement is linked to a direct quote from an anti-wind advocacy website. On that site, it is footnoted to opponents of wind development in Maryland, a small state where public lands indeed may include a limited number of sites for land-based wind, but which is hardly representative of the larger windy states stretching across the Midwest from Ohio to Oregon and south to Texas.

(Getting technical now) How realistic are the wind generation estimates in the DOE report? Very realistic. The report devotes an entire chapter to analyzing current wind turbine technology and possible areas for improvement through research and development (R&D). It assumes very modest improvements as the number of turbines manufactured increases. This leads us to another major hole in IER's document--it confuses the average capacity of a turbine (sometimes called "capacity factor") with the likelihood of a turbine generating electricity during peak electricity demand hours (known as "capacity credit"). These are different numbers--the average capacity of modern turbines typically ranges from 35% to 40% year-round, while capacity credit depends on how good a match there is between when the wind blows at the turbine site and the utility's electricity demand. Often, capacity credit is lower.

Let's see, how can I simplify this? Let's take a typical wind turbine. During an average year, it has an average capacity of 38%--sometimes it's producing 100% of its capacity, sometimes 20%, etc., depending on how hard the wind is blowing, but the average is 38%. However, during peak customer demand times for the utility that is using the electricity the turbine generates, the turbine's average capacity is 15% (this is not uncommon--the wind typically blows stronger at night, when demand is lower). This means that the turbine's average capacity overall is 38%, while its capacity credit is 15%. The DOE report, when it is talking about 20% of U.S. electricity demand being supplied by wind, is calculating wind generation based on average capacity, not capacity credit. That is correct, because it is talking about total electricity generation, not just electricity generated during peak demand periods. IER is contending mistakenly that capacity credit should be used instead--because IER and its "researchers," after more than a decade of writing articles attacking wind power, still do not understand much about it (except that it does not use fossil fuels and must therefore be opposed).

What about subsidies to wind? Ensuring a steady supply of energy is vital to our national economy. Because of that, all energy sources have been subsidized over time, and wind is no exception. So, the question then becomes, is the support that wind is receiving excessive compared with other sources, and the answer is no. A recent study from the consulting firm DBL Investors compares federal spending on renewable energy sources, including wind, with historical subsidies. According to DBL, "current renewable energy subsidies do not constitute an over-subsidized outlier when compared to the historical norm for emerging sources of energy. For example: … the federal commitment to [oil and gas] was five times greater than the federal commitment to renewables during the first 15 years of each [subsidy’s] life, and it was more than 10 times greater for nuclear." For more, see New report gives best 'apples to apples' picture to date of federal support for all energy sources, September 23, 2011.

What about the cost of wind power? The cost of electricity from wind power, with its existing federal incentive (the Production Tax Credit referred to earlier) is generally in a competitive range with other types of new power plants. Here are some data points:

- DOE's 20% by 2030 Report looked at the cost of a 20% wind scenario with that of a no-new-wind scenario, and estimated the added cost of the 20% scenario at $43 billion, or about 50 cents a month per household through 2030, adding "these monetary costs do not reflect other potential offsetting positive impacts" (such as reduced health care costs resulting from less air pollution).

- Xcel Energy, a major U.S. utility, recently announced plans to purchase more wind power for its Public Service of Colorado subsidiary. In doing so, Xcel commented, "This proposed purchase contains the lowest-cost wind energy we’ve seen, making it competitive with other energy sources. Even though Xcel Energy is ahead of schedule to meet Colorado’s 30 percent renewable energy standard by 2020, we can take advantage of historically low wind prices to give our customers more choice in the energy powering their home and businesses."

- A recent report from Lawrence Berkeley National Laboratory (LBNL) found that wind turbine prices have dropped sharply in recent years, due largely to the scaling up of turbine size to reduce cost of energy (COE) and the growth of a domestic supply chain as the U.S. dollar has declined against other major currencies.

- Another report, from London-based Bloomberg New Energy Finance (BNEF), said land-based wind farms will be "fully competitive" with conventional electricity sources in five years. BNEF said it sees the cost of electricity from land-based wind turbines declining 12 percent by 2016 "thanks to a mix of lower]cost equipment and gains in output efficiency," adding, "The best wind farms in the world already produce power as economically as coal, gas and nuclear generators; the average wind farm will be fully competitive by 2016."

What about competition from Chinese wind turbines? The U.S. has an inherent competitive advantage in manufacturing turbines to supply the American wind farm market, which, because of our enormous wind resources, is one of the world's largest and best markets. That competitive advantage arises from the fact that turbines and their main components (towers, blades, generators and gearboxes) are heavy and expensive to transport around the world. According to one major manufacturer, transportation costs make up nearly 20 percent of the installed cost of a new wind farm. In a highly competitive world, that's a big number, and most manufacturers are looking to shave those costs as much as possible. Obviously, one of the best ways to do that is to assemble the turbines and manufacture major components as close to the wind farm site as possible. The result? More than 10 turbine manufacturers have opened factories in the U.S. in the past five years--in other words, European turbine manufacturers are not opening new factories in Europe or in China to supply the U.S. market, they are building them here. They are also seeking to build supply chains here in America, to reduce shipping delays and increase efficiency.

What's the bottom line? Like the tornado that passed directly through a wind farm in Oklahoma earlier this month without harming the turbines it struck, IER huffs and puffs, but fails to make much of a dent on the Department of Energy's 20% Report or its vision of harnessing the extraordinary potential of America's vast wind resource. Expect more baseless attacks on wind power, though--as mentioned above, the American wind industry is driving hard to secure an extension of its key incentive, the Production Tax Credit, from Congress, and the fossil fuels industries are mounting an ever more desperate defense of business as usual.

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