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May 1, 2010

Wind’s Cost Is Underestimated; Its Value Overestimated

By Glenn Schleede

Improving Understanding of Wind Energy Costs and Value

The false claims and the widespread misunderstanding about the full costs and the low value of electricity from wind demonstrate that it is time to focus on facts.

One hopes that once the factors that affect the true cost and value of electricity from wind are understood, analysts, investors, reporters, and others interested in honest comparisons of costs and value will be able to make realistic estimates of at least the costs per kilowatt of wind generating capacity. But reliable estimates of the cost per kilowatt-hour of electricity produced by wind farms will still not be possible because such estimates are entirely dependent on factors that are and will remain unknown. Assumptions (i.e., guesses) made by those who claim they know the cost/KWh of electricity from wind can easily be in error by a factor of two or more.

Whether estimating the true cost of wind generating capacity or the cost of electricity produced from wind, the cost of federal, state, and local tax breaks and subsidies are dominant factors. There is no longer any serious doubt that tax breaks and subsidies – not environmental, energy, or economic benefits—are the primary reasons that “wind farms” are being built.

—Glenn Schleede is a veteran Washington energy analyst who has represented coal and electric power interests, served in several energy-related federal agencies, and was a major official in the Reagan administration’s Office of Management and Budget.