Your tax dollars from the $787 billion American Recovery and Reinvestment Act (ARRA) have begun to flow freely to “renewable energy facilities” in Texas. The stimulus bill tagged at least $110 billion for “clean” energy projects.
The Penescal Wind Farm in Sarita, TX (near Corpus Christi) recently received a $114 million stimulus grant. Penescal Developers will use the money to double the size of the facility. Under the program in Section 1602 of ARRA, the federal government will rebate 30 percent of the construction cost. The subsidy also includes accelerated depreciation to reduce taxes.
Wind farms already are heavily subsidized, without which there would be few if any on the ground. When federal subsidies lapsed in 2000, 2002, and 2004, wind farm development ceased. According to the U.S. Energy Information Agency, total federal subsidies for electric generation from wind in 2008 were $22.37 per megawatt hour, compared to 25 cents for natural gas.
The developers of the wind farm in Sarita, TX claim the expansion made possible by the taxpayers’ stimulus check will provide power to 70,000 homes. Seven thousand homes might be a more accurate figure. The 84 additional turbines at the Sarita facility will increase the installed capacity by 200 megawatts, but the actual electricity generated by wind farms is much lower than their installed capacity. According to the Electric Reliability Council of Texas, Texas wind farms generated electricity at 8.7 percent of installed capacity in 2008. Wind blows intermittently and at variable speeds.
Sarita developers claim the federal rebate will produce more than 200 jobs. Dividing the $114 million rebate by the 216 jobs, one arrives at a cost of more than $500,000 for each job! And are not most of the jobs for temporary construction? According to our state comptroller’s employment data, each 100 megawatts of installed wind generation supports no more than eight permanent jobs.
Investment bankers are all aflutter with the onset of stimulus money for renewable energy projects according to the August 31 Wall Street Journal. After a long lag, numerous firms have again invested upwards of $100 million in wind farms. Investors are attracted by the quick returns made possible by the hefty federal grants and tax benefits.
The growing subsidies for wind power mask wind’s high cost and inherent limitations, but only for so long. As of this summer, an average residential electric bill in Austin Energy’s GreenChoice retail program was $152, compared to $93 for its standard program. Indeed, the price of Austin’s GreenChoice electricity had doubled since early 2008. With almost no new subscribers for GreenChoice, in August, the Austin City Council directed the utility to slash GreenChoice rates and spread the higher cost of wind energy among all Austin Energy ratepayers.
Although appealing to many, wind power is an extremely expensive, inefficient, and unreliable source of electricity, incapable of providing base load power. Wind’s intermittency, variability, line loss, necessary back-up generation, transmission needs, and dispatch complexity limit the amount of electricity wind can secure. Ever larger mandates and subsidies will not make wind power more economically viable, as the European experience now demonstrates.
A recent study in Denmark, allegedly the world’s titan of wind power, reveals that wind met only five to 10 percent of electric power demands in the past five years, instead of the widely touted 20 percent. Danish utility rates are the highest in the European Union. And each “wind job” created by government subsidy cost Danish taxpayers between $90,000 and $140,000, figures similar to Spain’s subsidized wind industry.
Renewable energy may provide a welcome contribution to the Texas and national energy portfolio. Consumers, however, must demand the hard facts of the matter. Wind power must shed the government supplement and meet the tests of the free market place to find its appropriate niche.
Kathleen Hartnett White is Distinguished Senior Fellow in Residence and Director of the Armstrong Center for Energy & the Environment at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. White is the former Chair of the Texas Commission on Environmental Quality.