Category — American Wind Energy Association (AWEA)
“Once these hidden costs [of windpower] are included and subsidies are excluded, wind generation is not close to being competitive with conventional generation sources such as natural gas, coal or nuclear.”
- George Taylor, quoted below.
“However, to meet the 33% RPS, technical studies show ramp rates may triple, which is not possible for the [California] ISO’s conventional generation as configured today.”
- Clyde Loutan (Senior Advisor, CaISO), “How Intermittent Renewables Impact CallSO.”
George Taylor and I have published a new study for the American Tradition Institute (ATI) that finds that on a full cost basis, wind electricity is nearly twice as expensive as what is typically reported. “The Hidden Costs of Wind Electricity” provides an analysis of three major costs that past estimates have ignored.
“The costs that have been left out of previous reports are the costs of paying for the fossil-fired plants that must balance wind’s variations, the inefficiencies that wind imposes on those plants, and the cost of longer-distance transmission,” said Taylor in ATI’s press release. “Once these hidden costs are included and subsidies are excluded, wind generation is not close to being competitive with conventional generation sources such as natural gas, coal or nuclear.”
Adding a conservative estimate of the hidden but real costs to the Energy Information Administration’s (EIA’s) and the Office of Energy Efficiency and Renewable Energy’s most recent generation-cost reports increases wind’s projected cost from 8 cents to 15 cents per kilowatt-hour (kWh).
AWEA’s Rebuttal: Misdirection I
Taylor and I summarized our findings in the Washington Times opinion-page editorial, “Blow off wind-production tax credit” (December 19, 2012). We described the Production Tax Credit (PTC) as a bad deal, imposing additional costs on consumers and taxpayers with no offsetting benefits.
Unsurprisingly, AWEA spokesman David Ward repeated some industry falsehoods in rebuttal to our piece. His assertions (in blue) are followed by my rebuttal. [Read more →]
January 8, 2013 13 Comments
“Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousand fold by a factor that is insignificant in, say, physics, mathematics or medicine – the special pleading of selfish interests.”
- Henry Hazlitt, Economics in One Lesson (1946)
Henry Hazlitt (d. 1993) was born on this day in 1894. As has been done with other great classical liberal thinkers at MasterResource, this post celebrates Hazlitt’s birthday by applying his thinking to the current policy debate.
Specifically, Chapter 14 of Hazlitt’s book Economics in One Lesson, “Saving the X Industry,” despite being published in 1946, enlightens the current discussion about the wind production tax credit, which is set to expire at the end of this year unless Congress extends it.
I first read Hazlitt’s book while studying economics in college. It was a refreshing departure from the textbooks I was reading at the time, which were more numbers-focused and removed from reality. Economics in One Lesson is easy reading (some might say that’s because the truth is easy to understand), but for me it carried much more weight than the average textbook. It reframed my thinking and showed how widespread the broken window fallacy (the fallacy of believing that destruction creates positive net economic activity) is in our energy debates.
Economics in One Lesson traces through the many applications of the broken window fallacy, as they arose in past debates over economic policy. Those selfish interests repeated the same argument for nearly all industries that struggled to succeed in a competitive environment, so Hazlitt devoted a chapter to the “X” industry (the fill-in-the-blank industry). [Read more →]
November 28, 2012 3 Comments
“AWEA says that Congress should provide a tax credit for high-income earners to pay less than their “fair share,” while middle-class taxpayers borrow $12+ billion from China to subsidize an expensive, unreliable, environmentally destructive, alternative energy source, based on unsubstantiated claims, that will actually result in net job losses! Exactly why is that a good idea?”
Last week, head wind lobbyist, Denise Bode (AWEA), waxed eloquently about why extending the wind Production Tax Credit (PTC) is a splendid scheme that some of our legislators are supposedly supporting.
This immediately brings to mind Upton Sinclair’s insightful observation: “A man cannot be expected to understand something when his income depends on his not understanding it.”
Put another way, when a salesperson says their product is the cat’s meow, be careful that you don’t get caught in the claws.
‘All of the Above’: Caveat emptor
Denise says that an “All of the Above” energy policy is a terrific plan — but is it?
Let’s skip the hype and do some critical thinking about this for a minute, and see if this superficial sound-bite is sensible.
If we use all energy sources, that would include expensive sources — how is that a good idea?
If we use all energy sources, that would include unreliable sources — how is that a good idea?
If we use all energy sources, that would include environmentally destructive sources — how is that a good idea?
If you are connecting the dots here, you can now understand why Denise loves the “All of the Above” slogan — as (surprise!) such a lax directive would qualify her expensive, unreliable and environmentally destructive product to be included in our energy mix! [Read more →]
November 20, 2012 5 Comments
“[Romney] will allow the wind credit to expire, end the stimulus boondoggles and create a level playing field on which all sources of energy can compete on their merits.”
- Romney campaign spokesman, “Wind Energy Tax Credit Splits Obama, Romney,” Des Moines Register, July 30, 2012.
The extension of the 20-year old Production Tax Credit (PTC) for windpower and other qualifying renewable energy is a wedge issue in the national political campaign. And with growing state-level pushback against government subsidies for qualifying renewables, it is time to ‘put-up-or-shut-up’ for on-grid wind and solar technologies.
And it was VERY good news that the Romney campaign issued a statement two days ago officially opposing an extension of the wind PTC. The other side wants him to walk it back, but few tangibles epitomize the fluff and failure of government-knows-best than taxpayer investments in wind power and solar power
AWEA: In Panic Mode
Meanwhile, the American Wind Energy Association (AWEA) has pumped millions of dollars into a lobbying campaign to secure the PTC’s extension. It released the Navigant jobs study; funded a full-time media war room; and lined up President Obama, DOE’s Secretary Chu and Interior Secretary Ken Salazar as wind industry hucksters.
Coordinated endorsement letters signed by the Governors’ Wind Energy Coalition and brand name corporations were sent to Washington calling for immediate action while newspapers around the country published editorials rehashing the same talking points on why the PTC should be extended beyond 2012. [Read more →]
August 8, 2012 6 Comments
“AWEA’s job figures, dating back to at least 2009, may be nothing more than figures pulled from thin air.”
The numero uno goal of the American Wind Energy Association (AWEA) is extending the Production Tax Credit (PTC) beyond its current expiration date of December 31, 2012. Documents available on the trade group’s website show that about $4 million of AWEA’s 2012 budget ($30 million) was directed toward PTC lobbying.
With job growth the top political issue in this election season, AWEA’s strategic plan calls for rebranding of the wind industry as an economic engine that will produce steady job growth, particularly in the manufacturing sector. But therein lies a problem: the wind industry’s own record on job growth lacks credibility.
Public information suggests that AWEA has inflated its overall job numbers.
Section 1603 Job Inflation
Seventy-five percent of the Section 1603 largesse was lavished on big wind, yet, despite billions of taxpayer dollars, this sector experienced a loss of 10,000 direct and indirect jobs in 2010. This lowers AWEA’s reported total to 75,000 jobs. 
In April, the DOE subsidiary National Renewable Energy Laboratory (NREL) released its estimates of direct and indirect jobs created by wind projects receiving 1603 funding. The agency relied on the JEDI (‘Jobs and Economic Development Impacts’) model to estimate gross jobs, earnings, and economic output supported through the construction and operation of large wind projects.
But an investigation by the House Subcommittee on Oversight and Investigations rightly objected to NREL’s conclusions. The Subcommittee found that NREL overstated the number of jobs created under 1603, that it failed to report on the more important net job creation, and ignored potential jobs that would be created given alternative spending of federal funds. The key sticking point was that NREL did not validate its models using actual data from completed projects. [Read more →]
July 10, 2012 15 Comments
Ending industrial wind subsidies is a quadruple win: it fosters real jobs, promotes economic growth, protects endangered species, and elevates environmental values over image-making.
The public is coming to this view, not only energy realists. In the face of repeated efforts to extend (seemingly perpetual) wind energy subsidies by industry lobbyists, taxpayers and grass root environmentalists have said: ENOUGH.
Informed and inspired by a loose but growing national coalition of groups opposed to more giveaways with no scientifically proven net benefits, thousands of citizens called their senators and representatives – and rounded up enough Nay votes to run four different bills aground. For once, democracy worked.
A shocked American Wind Energy Association and its allies began even more aggressive recruiting of well-connected Democrat and Republican political operatives and cosponsors – and introducing more proposals like HR 3307 to extend the Production Tax Credit (PTC).
Parallel efforts were launched in state legislatures, to maintain mandates, subsidies, feed-in tariffs, renewable energy credits, and other “temporary” ratepayer and taxpayer obligations. [Read more →]
May 8, 2012 11 Comments
“The stakes here could not be clearer. Economic studies have shown that Congressional inaction on the PTC will kill 37,000 American jobs, shutter plants and cancel billions of dollars in private investment. Congress needs to understand that, with PTC uncertainty, layoffs have already begun and further job losses and even plant closings will accelerate each month as we near expiration in December.”
- Denise Bode, quoted in American Wind Energy Association, “As Wind Manufacturing Job Losses Loom, Bipartisan Wind Extension Drive Continues (February 16, 2012).
Three cheers for market-driven resource reallocation for personal and economic betterment.
Some of us can speak from personal experience. I was part of the 4,000-person layoff from Enron Corporation on Monday December 3, 2001. The economy became a little more efficient that day, as many started getting jobs at other energy companies and elsewhere where consumer demand was stronger.
Such is the ‘creative destruction’ of the market economy where the good replaces the bad, and where the even-better replaces the good.
The windpower industry is entering what could well be the beginning of a death cycle. Industrial wind is increasingly losing its special ratepayer and taxpayer support with democracies in deficit and consumers in search of cost and reliability advantages.
Judging from the ‘help wanted’ signs, the oil and gas industry stands ready to absorb the precious resources that have gone into the ‘Enron’ of energy sources. Some workers will need to be retrained, while others will find a closer integration of skills.
Perhaps even the employees of AWEA can become true environmentalists or libertarian to argue against ethanol and on-grid solar and light bulb mandates to close deficits and increase personal liberty. The pro-consumer, pro-taxpayer movement can always use a few more good women and men! [Read more →]
March 6, 2012 6 Comments
If you haven’t heard from the American Wind Energy Association (AWEA), you probably will.
Ominous, scary ads are running nationwide warning of the crushing blow to American jobs if Congress fails to extend the Production Tax Credit (‘PTC’), the 20-year ‘temporary’ subsidy most credited for market growth in the wind sector. The PTC is due to expire at the end of this year.
Most of the ads target particular House members who, so far, have resisted the industry’s demands for their PTC earmark. The pressure is particularly heated right now as Congress negotiates the payroll tax holiday bill, which is viewed by many as the last best chance to attach an extension of the PTC before November’s presidential election.
AWEA is also leaning on its friends to do its bidding. Politicos from wind-friendly states like Iowa, and Kansas have written letters to members of the Congressional conference committee that’s now hashing out the tax bill. The letters repeat the same tired talking points about jobs.
It’s embarrassing to see these politicians blindly repeat what they’ve been told with no apparent understanding of the costs and impacts of pro-wind policies. Government (taxpayers) do not create jobs on net. Resources taken from the private sector reduced demand and thus (unseen) jobs to create the seen (wind) jobs.
But higher energy costs and misallocated resources in the process make us all poorer. Henry Hazlitt refuted ‘green jobs’ decades before the term was invented in Economics in One Lesson via his explanation of seen-versus-unseen jobs.
A Ballooned Subsidy
Do you think Senator Harkin or Governor Brownback realize that since the PTC was adopted in 1992, its annual cost has ballooned from $5 million a year in 1998 to over $1 billion annually today. Or that this open-ended subsidy of 2.2¢/kWh in after-tax income represents a pre-tax value of approximately 3.7¢/kWh? In many regions of the country the PTC equals, or exceeds the wholesale price of power! [Read more →]
February 13, 2012 41 Comments
Until the end of 2010, the American Wind Energy Association’s annual reports were in the public domain. The details of their business now go to members only.
What has changed? What information has the lobby organization decided to share only with insiders? And why?
A look at some of AWEA’s slanted and aggressive one liners, such as August 4th’s Continued Growth Depends on Consistent Tax Policy, is revealing. Make no mistake–the fate of the industry is not in the hands of consumers as it is with virtually all other goods and services in our economy. It is wholly government dependent. And in terms of the paramount budget debate, wind power is not viable without exemption from its American duty to help reduce our national debt.
AWEA’s predicament has lead them to simultaneously threaten and beg Congress. “Project activity and orders for 2013 and beyond are scant because of the lack of a predictable business environment, causing layoffs and even bankruptcies in American manufacturing plants and the supply chain,” said AWEA. “These struggles for U.S. wind manufacturers will only worsen if Congress were to allow the tax credit to expire.”
Recently, I told my 10-year old daughter that she had to clean up her room before having friends over to play. Her response reminds me of AWEA’s threat/plea to Congress: “Daddy, if you don’t let me have a friend over this weekend, I’LL NEVER CLEAN MY ROOM AGAIN!” What’s a father – or a Congress – to do?
And more from last week’s press release: “Clearly Congress cannot take for granted all the wind energy manufacturing and construction jobs that have been a bright spot through the recession.”
August 8, 2011 2 Comments
The newly released Annual Market Report, 2010 from the American Wind Energy Association (AWEA) can be summed up in one word — Spin!
I’ve tracked the wind industry’s progress closely in the last six years, and mapping our observations to their declarations is always a challenge; AWEA’s reports are packed with assertions but rarely include the data and assumptions on which claims are based.
This year’s report was no different. To illustrate the point, it is useful to critically examine some of their claims. After all, we as taxpayers directly or indirectly enable the projects that make this trade association possible.
High Cost, Low Value
With natural gas selling at record lows, and supplies expected to be abundant through this decade, if not far longer, wind developers are under pressure from investors to secure power purchase agreements (PPAs) with utilities.
Most PPAs for onshore wind we’ve reviewed lock-in purchases for 15+ years at roughly twice the wholesale price of fossil and nuclear resources within their respective regions. In some cases, the prices are fixed regardless the time of day the energy is delivered or number of years into the contract; others apply adjustments for on- and off-peak energy and may include annual escalators.
In states where renewable portfolio standards have been adopted, utilities likely have no choice but to accept above-market rates which are passed through to customers in the rate base.
AWEA claims that average power purchase agreements for wind generation in 2010 were priced around 6 cents per kilowatt-hour (kWh), which it asserts approximates the same wholesale price for combined cycle natural gas plants–and is about 2 cents cheaper than coal-fired electricity. It might be true that wind PPAs are around 6 cents per kWh, but comparisons to natural gas and coal are not appropriate. [Read more →]
April 11, 2011 4 Comments