I recently heard a radio commercial urging me to contact various members of Congress to voice my support for tax credits connected to the wind energy industry. On a lark, I went to the Iowa Legislature website and searched active bills for the word “wind,” and received several dozen hits, many of which seemed to be focused on state tax credits for manufacturing and installing wind turbines. Both state and federal politicians seem to be tripping over themselves to get into the wind energy craze.
Back in 2010 Alliant Energy was petitioning to be allowed to increase the rates they charged for electricity, and one of the supporting reasons they put forward was the $150 million project called the Whispering Willow-East wind farm in Franklin county. This was big news in Newton, where I was living at the time, as Newton is both the location of some wind turbine manufacturers, and within the area that would be affected by the rate increase.
This serves as perhaps a perfect litmus test for how people think about economics. If you are a progressive or a neo-Keynesian, then your reaction is likely to be that this is entirely appropriate; these wind farms are being built for our benefit, so of course we must pay. If you are an environmentalist or a socialist, then, of course electricity should cost more in your mind. As you are increasing your standard of living, at the unfair expense of the environment or the proletariat, it would be akin to questioning whether people should be locked up for committing assault, wouldn’t it?
If you believe in Austrian economics, or just in free-market pricing in general, then this situation would seem a bit odd. The supply of electricity is presumably increasing because of new wind farms. Increases in supply tend to reduce pressure on prices, not cause them to increase. Yet here, the new wind projects are being cited as a reason to increase the rates per kilowatt hour to the end users. They have built a wind farm, and now demand to pay for it by charging more for electricity still produced mainly by coal which could have been provided for the old price if they hadn‘t bothered to build the wind farm.
That is how capital investment works; if you couldn’t make money by building houses in the current market, but you build a bunch of houses anyway, it doesn’t cause the price of houses to go up. Wind energy doesn’t seem to follow the script of wealth creation.
The rule of thumb seems to be that a wind turbine costs about $1 million per nameplate megawatt of capacity, so if a turbine has 3 megawatts of stated capacity then it would cost about $3 million. Then you have to factor in what the industry refers to as the “capacity factor,” which is the percentage of the nameplate capacity that the turbine actually produces, and in Iowa the capacity factor is said to be about thirty percent. In plain terms, that means that if you want one megawatt of electricity, you need a three-megawatt wind turbine. However, it isn’t as simple as that. Although Iowa might be the “Saudi Arabia of Wind” – proclaimed as such by people who have likely never been to Saudi Arabia, nor had difficulty paying their electric bills – our winds are not constant.
When the wind doesn’t blow, the turbines don’t turn. The same is true for when the wind is too strong – wind turbines are equipped with a braking mechanism to stop them during high winds. If that brake fails, the turbine blades can rattle the entire tower to pieces, if the generator doesn’t catch on fire first – which you should look up on the internet because it is an interesting sight.
As a result of all the shortcomings of wind turbines, wind power costs about $90 per megawatt hour, compared to about $60 per megawatt hour for coal and even less than that for natural gas-generated electricity, yet we are told we need to fill our skylines with expensive wind turbines which spend most of their lives perfectly still and producing nothing – and then charge us for the cost of the electricity these intensely ugly things don’t produce. The Iowa Wind Energy Association has a goal to increase Iowa’s wind capacity from 4,500 megawatts to 20,000 megawatts by 2030 – so we can enjoy 6,000 megawatts of electricity doled out in intermittent intervals.
Germany announced its intent to decommission all of its nuclear power stations after the Fukushima incident, and the German government has been very supportive of wind energy, but not a single coal plant has been shut down. In fact, Germany is replacing its nuclear capacity with new coal power plants – as many as 26 new coal power plants are planned. The wind, like the sea, is a fickle lover as it would seem.
According to wind energy supporters, expanding wind energy creates jobs, and therefore none of the shortcomings in the technology or the economics are considered to matter. This attitude seems to be the source of the consensus among political leaders – or at least the appearance of consensus – as politicians go along with the wind energy movement lest they be accused of being “against jobs.” There are even pictures of wind turbines on Iowa’s new driver’s license design.
The wind energy addiction will end up being much the same as the other fads. State and federal tax credits, grants, and green energy targets are directing capital towards these wind energy projects. The jobs created in the short term are visible to politicians seeking reelection, but the damage is diffused across the entire economy and the effects won’t be felt until later. They can see the turbine blades going down the interstate, but not the higher utility bills of their constituents – including employers – nor the layoffs when the negative financial effects become impossible to ignore. Americans are too broke to pay for expensive wind-generated electricity, governments are too broke to continue subsidizing these projects, and the economy is too broke to carry an industrial sector which generates no profits, no useable increases in electricity, and no discernable tax revenue.
Wind turbines don’t increase the standard of living; in fact they seem to make energy more expensive. They only work intermittently, wear out rather quickly without expensive maintenance, and are heavily dependent on government credits and grants for their manufacture and installation. They have also been known to kill eagles, which is reason enough to hate anything.
The future might be filled with wind turbines, but that won’t be a positive thing. They are too expensive and too underproductive to provide electricity in quantities and at prices that are necessary to make them profitable. Elected officials at all levels need to move past the rhetoric of the wind energy craze and do their own research into this matter.
Unless they do so, they have no business voting to appropriate public funds to support the construction of more public relations kitsch at $1 million per nameplate megawatt. Even now attention is turning towards natural gas as the real driver of future energy production while a combination of better exploration techniques and hydraulic fracturing makes natural gas properly cheap.
Alliant itself is looking at building a new natural gas power plant – in Iowa.
About the Author
Mr. Waechter is an attorney and a recent graduate of Drake University.
Sorry, comments for this entry are closed at this time.