Report: Wind generation costs twice as much as government estimates

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Michael Bastasch Contributor
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As lawmakers rush to hash out a deal to extend tax credits for wind energy generation, a new report shows that, once hidden costs are accounted for, the true cost of wind power generation is twice that of what previous government estimates have shown.

“Once these hidden costs are included and subsidies are excluded, wind generation is not close to being competitive with conventional generation sources such as natural gas, coal or nuclear,” said George Taylor, lead author of the report and senior fellow in energy policy at American Tradition Institute, in a statement.

For example, wind generation costs three times as much as natural gas-fired electricity and up to 50 percent more than government estimates for new nuclear and coal power generation.

The Energy Information Administration reported in its most recent “levelized cost of electricity” that wind generation costs eight cents per kilowatt hour. However, this understates the true cost of wind generation because it leaves out indirect and infrastructure costs which are hard to measure and raise the true cost of generating wind power.

Most electricity cost estimates fail to take into account, the cost of keeping fossil fuel power plants online to balance out the variations in wind power generation, and the increased fuel consumption — per unit of output — which wind requires of power plants. Estimates also typically don’t include the additional long-distance transmission costs required by wind, as well as the electricity losses associated with it.

“The costs that have been left out of previous reports are the costs of paying for the fossil-fired plants that must balance wind’s variations, the inefficiencies that wind imposes on those plants, and the cost of longer-distance transmission,” Taylor said.

Taking these hidden costs into account, as well as two subsidies, the cost of wind generation doubles — from eight cents per kilowatt hour to 15 cents per kilowatt hour when added to natural gas generation. the cost is even higher — 19 cents per kilowatt hour — when added to coal generation.

“Because wind is an intermittent source of electricity, it needs appropriate amounts of fossil-fueled capacity ready at all times to balance its large and rapid variations,” added Tom Tanton, co-author of the report and Director of Science & Technology Assessment at ATI, in a statement. “Those primary fossil plants then operate less efficiently than if they were running full-time without wind, meaning that any savings of gas and coal or any reductions in emissions are much less than simple calculations would indicate.”

The high costs associated with wind power generation have been used to argue for allowing the heavily debated Wind Production Tax Credit to expire, which will cost $12.1 billion for one year of extension, according to the Joint Committee on Taxation.

Congressional Republicans are split on the issue of extending the tax credit for wind, with Republicans in wind heavy states arguing for an extension of the credits to create jobs and economic growth.

“This production tax credit for wind is working and should be part of the effort in Washington here to get more Americans working as well,” said Iowa Republican Sen. Chuck Grassley. “Certainty about tax policy and affordable energy are factors for economic growth.”

In September, forty-seven House Republicans, including Rep. Mike Pompeo of Kansas, sent a letter in September to House Speaker John Boehner urging him to allow the wind PTC to expire.

“We believe that the Solyndra scandal has demonstrated that it is time for the federal government to stop picking winners and losers in the energy marketplace,” according to the letter. “Twenty years of subsidizing wind is more than enough.”

The federal wind Production Tax Credit was put into place in 1992 to get the wind industry on its feet, and has since been renewed seven times. The tax credit is set to expire at midnight tonight absent a deal to extend it.

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