The Siren Song of Wind Power: Impending Competitiveness

“The wind PTC was initially passed in 1992 as a temporary incentive to help a then fledgling industry… However, after nearly 40 years of subsidies for wind energy R&D and 20 years of lucrative wind energy tax breaks — together totaling over $100 billion, ‘electricity from wind remains high in true cost and low in real value.’”

– Glenn Schleede, “Republicans for Obama Energy (Senate Finance Committee Okays PTC/ITC Subsidies),” April 16, 2014.

 

Consumers pick the best alternatives in terms of price, quality, and convenience. The winners earn the appellation economic, the losers noneconomic.

But special political favor can reverse the verdict: the otherwise unprofitable can be made profitable and vice-versa. In the case of industrial wind turbines, government intervention—from tax credits to mandated purchases—has reversed free-market verdicts. Dilute, intermittent technology is propped up at the expense of concentrated, reliable alternatives.

Why political favor for industrial wind turbines, a fringe, experimental loser in the pre-subsidized era? It’s a Bootleggers-and-Baptists story, with different interests, even strange bedfellows, aligning for a shared outcome.

The Baptists cry Global Warming as if countless wind turbines will save the world. (Fantasy, says the father of the climate alarm, James Hansen.) The Bootleggers, meanwhile, capitalize on the outside rationale and get special political favors. Bad profit replaces good profit across the energy industry.

Concentrated benefits for the rent-seekers, diffused costs for consumers and taxpayers. Politicians happily broker the deal. The result in our example is the 64-staff, 20-member board, $22 million budget American Wind Energy Association.

AWEA promotes and lobbies for wind power, and has received extension after extension of the 1992 federal Production Tax Credit (PTC): 1999, 2002, 2004, 2005, 2006, 2008, 2009, 2012, 2014, 2015, 2016, and 2019. Add to this dirty dozen a favorable IRS ruling this year on PTC eligibility for number thirteen.

Promises, Promises

If wind were competitive against gas-fired power generation, AWEA could let the PTC expire and no longer support mandated purchases and transmission subsidies. But then wind’s many corporate buyers would receive a much higher invoice—and presumably back-off. Instead of embracing free markets and interfuel neutrality, AWEA and the broader wind lobby fill the air about their technology’s impending competitiveness.

It’s a tired refrain that is now in its fourth decade.

A review of these promises from the 1980s until today is humbling.

• In 1983, s study by Booz, Allen & Hamilton for AWEA and other renewable groups concluded: “The private sector can be expected to develop improved solar and wind technologies which will begin to become competitive and self-supporting on a national level by the end of the decade if assisted by tax credits and augmented by federally sponsored R&D.”
• In 1986, a representative of AWEA testified: “The U.S. wind industry has … demonstrated reliability and performance levels that make them very competitive. It has come to the point that the California Energy Commission has predicted wind power will be that State’s lowest-cost source of energy in the 1990s, beating out even large-scale hydro. We are not quite there. We have hopes.”
• In 1986, Amory Lovins of the Rocky Mountain Institute lamented the untimely scale back of tax breaks for renewable energy, stating that the competitive viability of wind and solar was “one to three years away.”
• In 1986, Worldwatch Institute concluded: “Utility-sponsored studies show that the better wind farms can produce power at a cost of about 7¢ per kilowatt-hour, which is competitive with conventional power sources in the United States.

In 1990, the Worldwatch Institute predicted that “within a few decades” renewables could have 90 percent of the power market with wind at 20 percent. The actuals today are 20 percent and 7 percent.

In 2011, just to use one other example, Joe Romm of the Center for American Progress stated: “It is clear that solar and wind are competitive in many situations right now.”

The beat goes on. AWEA in 2017: “Wind power is competitive on reliability and resilience.” Bloomberg in 2019: “Now all signs show renewable energy has come of age and can go head-to-head with fossil fuels.” And this summer from the International Renewable Energy Agency: “Newly installed renewable power capacity increasingly costs less than the cheapest power generation options based on fossil fuels.”

The disappearing need for wind’s lucrative tax credit has also long been predicted. In 1984, Christopher Flavin of the Worldwatch Institute stated: “Tax credits have been essential to the economic viability of wind farms so far, but will not be needed within a few years.” And Flavin again in 1985: “Although wind farms still depend on tax credits, they are likely to be economical without this support within a few years.”

And on the political side. “I’d say we’re going to have to [extend the wind PTC] for at least another five years, maybe for 10 years,” said Chuck Grassley (R-IA) in 2003. Sometime we’re going to reach that point where it’s competitive (with other forms of energy).”

We are still waiting ….

Conclusion

The quandary of wind power reflects the embedded inferiority of dilute, intermittent energies versus mineral energies. The problem is certainly not a lack of political will; the growth of AWEA reflects the economic and environmental problems of inferior technology that only the brute force of government can neutralize for business opportunity.

“The infant industry argument is a smokescreen,” noted Milton and Rose Friedman many decades ago. “The so-called infants never grow up.” And so it is with wind power, not to mention its political sister, on-grid solar power.

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