On May 2 The Hill published a column by AWEA data spinner Michael Goggin, “Wind energy protects consumers,” in which the reader is regaled by tales of great service and low, low prices provided by the wind energy industry.
Sorting through the claims led me back to the AWEA blog, where among other things Goggin applauds the industry that pays his salary for its grand performance in trying times this past January in New York. Goggin exclaimed the New York grid operator “received very high wind output when it needed it most during the last cold snap, while other forms of generation experienced a variety [of] problems.”
Following the link provided to the NYISO press release I find the claim, “On Tuesday, the NYISO had the benefit of more than 1,000 MW of wind power throughout much of the day.” The New York grid operator reported peak demand during the day (January 7, 2014) at 25,738 MW, so wind energy’s contribution was in the 4 percent range. Another way to say that is that other forms of generation, despite experiencing a variety of problems, provided about 96 percent of the energy New York consumers received when they “needed it most.”
The AWEA website indicates that New York has an installed capacity of 1,722 MW of wind power. Doing the math reveals that about 40 percent of the wind energy industry’s generating capability failed to show when New York electric power consumers “needed it most.”
Impressive? Not really.
To more fully consider the situation, we’d have to ask just how much non-wind electric generating capacity has been driven from the New York market by subsidized wind power. It is part of the AWEA storyline that clean, low-cost wind energy “displace[s] output from the most expensive and least efficient power plants,” and obviously over time frequently displaced units are driven from the market. One may reasonably wonder how much generation capacity was driven from the market before that cold January day when New York electric power consumers “needed it most.”
In related news, the National Renewable Energy Lab just produced an exploration of the wind energy industry’s future with and without the Production Tax Credit. In brief, if the PTC is not revived once again, the industry will likely shrink by about half over the next several years, kept in business mostly by state renewable energy purchase requirements. Indirectly the study concedes that NREL doesn’t think wind power is cost competitive with alternative electric energy supplies, but under the best possible wind resource and grid access conditions.
Please note my occasional wind energy disclaimer: I am not against wind energy (a technology which can contribute real value in the right places), just against bad policy (which takes real value created by other people and shovels it in the direction of investors in wind energy assets and people who happen to own windy plots of land with good grid access).
Wind generated electricity is currently not “ready for prime time”. Absent appropriate, economical storage capacity, wind generated electricity might never be “ready for prime time”.
The money currently being spent on efforts to commercialize wind might well be better spent doing R&D on electricity storage.
I agree with your first best world (level playing field, technology neutral, etc.) but wonder how you feel about the relative success of the coal fired electric power industry in resisting and blocking the imposition of pollution controls and in avoiding incorporating the pollution costs into the price of electric power. Coal fired electric power has done a spectacular job via lobbying and litigating over the past 40 years in maintaining the (implicit) subsidy we give it by not charging it for the asthma and premature death that it causes. For a reference point on this see the AER piece by Muller, Mendelsohn, and Nordhaus from a few years ago.
https://www.aeaweb.org/articles.php?doi=10.1257/aer.101.5.1649
I don’t think anybody in the wind industry, if they could pick a first best alternative, would propose the PTC and RPSs (with extremely uneven enforcement provisions). My guess is that a lot of these folks would say let’s have a serious carbon tax and use the money to cut the corporate rate by as much as we can (after all, the people who really finance wind are the firms with tax appetite). From wind’s perspective, this approach would also help it compete with CCGTs.
But that’s not the world we live in. And its not the world in which AWEA or the Utility Air Regulatory Group or the Coalition for Responsible Regulation or ANGA or API all have to operate in. The PTC is the best wind can hope for in the real world and it is not so simple to say it’s a bad thing from a social welfare perspective, given the real baseline scenario.
The paper linked in the comment above provides a nice illustration of the fundamental dishonesty of externality analysis.
Externality analysis is a cost benefit analysis that by design ignores the benefits of the technology that is being analyzed.
No surprise when you ignore the benefits something provides and only evaluate the costs your analysis will always show that use of the technology is negative.
From the linked paper
Believing the externality analysis in the linked paper requires believing dumping raw sewage in the waterways is environmentally beneficial.
“Wind-Power Tax Credits Need to Be Blown Away: Wind energy undercuts coal and nuclear power, harms the land and wastes money.” By Lamar Alexander, May 7, 2014
http://online.wsj.com/news/articles/SB10001424052702303678404579540270543985540