Under Siege

As I write this column on Election Day 2012, the polls are still open and both presidential candidates are predicting victory. The next dozen hours or so will prove only one candidate correct. Regardless of the outcome, wind power remains a loser.

The Production Tax Credit (PTC) for wind power expires at the end of this year unless Congress takes affirmative action to renew the law. This expire-renew cycle has occurred seven times since the PTC was first put into effect in 1992. However, unique events are in play this year that signal waning support for its renewal.

Opinions Differ

There is increased squabbling within environmental groups, particularly the Sierra Club, about the consequential environmental damage caused by wind power. “Aviary mortality” is the clinical term used to describe the bird annihilation caused by wind turbines. One Sierra Club area representative uses the metaphor “Cuisinarts of the air” to describe wind turbines. At last count 77 organizations were petitioning the U.S. Fish and Wildlife Service to toughen the rules for siting, permitting, and operating large-scale wind projects. Rules proposed by the Fish and Wildlife Service for wind turbine installations were deemed “unworkable” by the American Wind Energy Association (AWEA), which continues to dismiss bird kills as a serious problem.

Internal friction burst into flames recently when Exelon (a member of the AWEA board) went public with its view that the PTC was no longer necessary and should be allowed to expire. Exelon argued that the PTC was distorting competitive wholesale energy markets and was causing harm to other “clean energy” sources, such as nuclear energy. Exelon was quickly “voted off the island” at an emergency board meeting that excluded Exelon. Opposing points of view are clearly not valued by AWEA.

The root cause of the market and economic distortions described by Exelon is the PTC. The PTC pays the owner approximately $22/MWh for energy (not firm capacity) sold into a market. In some regions wind farm owners bid into the electricity market at a zero or negative power cost up to the value of the PTC in order to stay first in the production queue. The market distortion is particularly prevalent during periods of low power demand and excess electricity supply, where these artificially low power prices force baseload plants to operate at less-efficient part load.

The economic distortion is exacerbated in states with a renewable portfolio standard (RPS), where mandated power purchase agreements pay two to three times the marginal power cost. Not only does the PTC enable priority operation, but it also ensures that we all pay a premium for that power. The cost is buried in the government-approved utility rate structures. Also, 75% of the wind turbine installations since 2006 have been in only 11 states. The PTC has had the effect of shifting the cost of wind power development from a small number of states to taxpayers nationwide.

Forgotten Mandate

Forgotten by many proponents is the justification for the PTC in the first place: to reduce CO2 emissions. When the PTC was originally enacted, this justification was blindly accepted by many states without independently confirming CO2 reduction claims. The result was RPSs designed to encourage wind by exercising a state’s political muscle over electricity markets. (See “THE BIG PICTURE: A Renewables Quest,” p. 10 for an infographic of U.S. and global RPS standards.) Ironically, not one state RPS has a written requirement to reduce CO2. Intuition is not a substitute for empirical studies.

Over the past few years a large number of studies have been conducted in the U.S. and the European Union that conclude the fossil-fueled equipment used to balance the grid (“chase” wind because of its limited and unpredictable supply), and the loss in efficiency of baseload plants forced to operate off design, produce about zero net change in CO2emissions. Some studies predict a little more, some a little less. I also find it interesting that many utilities with large amounts of wind generation steadfastly refuse to release operating data for analysis. I suspect to do so would mean the release of empirical data to build the opposition’s case for insignificant CO2 reduction and poor operating economics. I was unable to find one study of existing wind energy installations that found the CO2 reductions predicted by AWEA.

The number of grassroots organizations opposed to government-mandated and -supported utility-scale wind power projects is growing rapidly. The Industrial Wind Action Group maintains a growing list of organizations (more than 150 at last count) on its website (windaction.org) that have been formed to oppose new wind power parks and to bring reason to the public debate about the true value of the electricity produced by wind power.

Follow the Money

AWEA, as the industry’s principal lobbyist, has failed to state a compelling reason why the PTC should be renewed for a mature technology with minimal environmental benefits. This is particularly telling when support from environmental groups is splintered and the number of opposition groups is growing, getting better organized, and loudly telling Washington of their concerns.

At its core, the PTC is public support of a few wind farm developers, owners, and equipment manufacturers wishing to sustain profits produced by a generous tax subsidy. In my mind, that’s no reason to renew the PTC.

Dr. Robert Peltier, PE is POWER’s editor-in-chief.