When it comes to wind energy, Texas would be wise to keep an eye on China.

China, the world’s second-largest consumer of energy, is turning to renewable sources – primarily wind. According to Bloomberg New Energy Finance, China invested $34.5 billion in low-carbon technologies in 2009, compared with $18.6 billion in the US. In 2009, China invested $110 billion – 2.2% of its gross domestic product – in power construction projects, increasing wind projects by 44%.

What has China received in exchange for its spending on wind power? Overcapacity. Over the last nine years, China’s government has launched several subsidy programs designed to support domestic manufacturers. These subsidies have flooded the market with more turbines than needed to meet demand.

According to Asia Times Online, many internal experts have pointed to potential waste in China’s large-scale wind power development. China will require extensive upgrades to its power grid to support these large-scale wind farms. These were costs not anticipated, nor accounted for, in the original investment plans.

These problems are the same that Texas will experience. As explained in our sunset report on the Public Utility Commission of Texas, the below market price of wind – due to state and federal subsidies – floods the system with more wind than it would otherwise have, increasing the challenge of maintaining system reliability and the costs of ancillary services. Not only could this have a detrimental impact on system reliability at peak loads, it could also threaten the success of Texas’ energy-only market.

Texas should look to China as an example of the failure of wind power and reach a similar conclusion -namely that “investment in large-scale wind development has created large-scale waste, and the sustainability of such projects is brought into question.”

– Ryan Brannan