Wind’s Cost Is Underestimated; Its Value Overestimated

By Glenn Schleede

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Probably the most common wind energy question that I receive from analysts, reporters, and interested citizens deals with the cost of electricity from wind. The frequency of the question is understandable since estimates provided by the wind industry, federal and state agencies, contractors, and the media understate the true cost and ignore the fact that electricity from wind is very low in value.

Typically, those asking the question would like a simple way to compare the cost of electricity from wind with the cost of electricity from other sources. Unfortunately, that isn’t possible. For those who insist:

The first short answer is that the true financial cost of electricity from wind is huge compared to electricity from reliable generating sources.
The second short answer is that the cost of electricity from wind should not be compared with the cost of electricity from reliable generating sources because the value of electricity from wind is much lower.

Pervasive Misunderstanding of the True Cost and Value of Wind Electricity

Few people in the general public, media, or government know the facts about the high true cost and low true value of electricity from wind. For example, not long ago, the delegate to the General Assembly representing my district in Virginia stated repeatedly during a telephonic “town hall” that electricity from wind “is now competitive” with electricity from coal. The delegate has a degree in electrical engineering and a long record of accomplishments in electronics. His statement is consistent with claims often made by wind industry lobbyists. Unfortunately, the statement is false.

The delegate’s false statement is understandable since the U.S. Department of Energy’s national laboratories and other contractors (all paid with tax dollars), the wind industry, and other wind energy advocates have for years issued false and misleading claims about the cost and value of electricity from wind.

Critically important among the elements of true cost that wind energy advocates often understate or ignore is the huge cost of tax breaks and subsidies provided to the wind industry. Wind industry lobbyists have been exceedingly effective in winning tax breaks and subsidies from governments. When initially proposed, wind energy advocates argued that tax breaks and subsidies were necessary to permit a relatively “new and developing technology” to gain a foothold in competition with other sources of energy for producing electricity.

That was in the 1992 Energy Policy Act, which created renewable energy production tax credits. Nearly 20 years later, the wind industry says it still needs those subsidies.

Federal, state, and local government tax breaks and subsidies for wind have become so prevalent that it’s virtually certain that the politicians and regulators who provide them have no understanding of their magnitude and cost. It’s also clear that they have not weighed benefits and costs. There is no question that they have decided to put the special interest of the wind industry ahead of the interests of taxpayers and electric customers who are paying for their largess.

Wind industry demands for continuation, expansion, and extension of subsidies have made it clear that there are no longer any serious expectations that wind energy is competitive or that improvements in the technology will eventually make it competitive. The original argument for wind subsidies no longer has any validity.

Instead, it appears that the only hope that wind energy would become economically competitive with traditional energy sources is if the cost of electricity from traditional sources were driven much higher—with all the adverse impacts on electric customers and local and national economies that result from high electricity prices.

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