Love and Money – Another West Texas Wind Energy Story

Michael Giberson

“We used to curse the wind,” Max Watt said. “Now we love it.”

The aptly named Max Watt is a Nolan County, Texas landowner benefiting from the wind energy boom. The quote is from a Reuters story describing how the boom in wind farm construction in west Texas has led to a boom in school facility construction. More: “It’s the greatest thing that has happened here,” said James Bible, superintendent of the Blackwell Consolidated Independent School District, where the shell of a new school is rising, financed mainly by tax revenue from windmills. “It’s like day and night for the school districts.”

[HT to WSJ’s Environmental Capital]

2 thoughts on “Love and Money – Another West Texas Wind Energy Story

  1. So where does that money for the new schools come from?

    It is cross-subsidy from the people in Houston and Dallas who will be paying more for their electricity because of our misguided policy of building windmills rather than the lowest cost, high reliabiliy generation. The highly favorable MACRS treatment for wind means that other federal taxpayers will pay more in taxes (or see a higher national debt). I admit, I wish nuclear had such favorable tax treatment – wind gets a 3 year depreciation schedule while nuclear gets a 20 year schedule.

    I’m glad they are getting a new school but let’s look behind the curtain here.

  2. It is a good point. Has anyone done a thorough estimate of the distribution of the (costs and benefits) of the subsidies provided to wind power in Texas? The Texas Comptroller Office’s Energy Report 2008 has some discussion of energy subsidies. It is a start, but it is far from a complete analysis of state and federal subsidies.

    Clearly some landowners and related local taxing authorities are benefiting in Texas. Wind turbine producers and the suppliers of components in limited supply likely capture some of the economic rents. Wind farm developers and owners, too, may capture rents, but my guess is that they are in the more competitive end of the business, and gain something closer to normal profits. But I’d like to see a real analysis, not just my speculations.

    The likely alternative to building wind in Texas at present would be more natural gas fired generation (which might actually make sense economically if the long run supply situation has been fundamentally changed by production technology; otherwise, it just exaggerates the state’s current high exposure to varying natural gas prices). Coal faces a lot of opposition and a few logistical barriers on the fuel supply side in Texas, and nuclear, too, faces significant political opposition. I think more nuclear will be added in Texas, but it will be a number of years in coming.

    So at present, would the state be better off without the subsidies and the wind power that came with it, and had equivalent generation from additional natural gas fired plants in the state? My instinct suggests that the answer must be yes, but my instincts have been wrong before. I think the issue is worth investigating.

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