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Fact check: Heritage's Kreutzer errs on cost of wind power

Fact check: Heritage's Kreutzer errs on cost of wind power

The fossil-fuel-funded Heritage Foundation's David Kreutzer has the latest in its ongoing series of blog posts bashing wind power. Mr. Kreutzer's post, published Friday, omits a number of important facts:

Wind energy keeps electricity prices–and risk–low. Regions of the country that have experienced significant growth in wind energy over the last several years have also seen significant declines in wholesale power prices, according to Wall Street analysis firm Bernstein Research. With no fuel costs, wind energy contracts can lock in energy prices for a 20”year term or longer, similar to the stability that a long”term fixed”rate mortgage offers to homebuyers. Wind energy protects consumers from the fuel price volatility that must be passed on to consumers and is the largest source of consumer electric rate increases.

Wind energy’s hedge goes further, as it is also immune to environmental regulations leading to expensive retrofits on power plants, and uses no water. For example, a Ceres news release says its report, The Ripple Effect, “shows that some of the nation's largest public utilities may face moderate to severe water supply shortfalls in the coming years, yet these risks are not reflected in the pricing or disclosure of bonds that public utilities rely on to finance their infrastructure projects.”

Years of technological innovations and an influx of made”in”the”USA manufacturing have drastically driven down the cost of wind energy. A January 2012 study from the Lawrence Berkeley National Laboratory shows that it costs between 24 and 39 percent less to produce wind energy on a per kilowatt”hour basis today than it did in 2002”2003. These cost declines are reflected in data from state
Public Utility Commissions and state”level data on electricity prices.

The argument that RPSs or wind energy have a negative impact on consumers is contradicted by all available data on the topic. As AWEA Manager of Transmission Policy Michael Goggin wrote here in January:

For the 30 states with the least installed wind capacity and the District of Columbia, a group for which wind only accounted for 0.3% of electricity produced in 2010, electric rates increased by an average of 26.74% between 2005 and 2010.  For the 20 states that produced the largest share of their electricity from wind (ranging from 2% to 15.4%) in 2010, consumer electricity prices increased an average of only 15.72%. 

“When one looks at the top wind states, the difference is even more striking.  For the 40 states with least wind installed and DC, prices rose by an average of 34.10%.  For the top 10 states in wind generation (with wind providing between 5.1% and 15.4% of electricity), electricity prices increased an average of only 10.94%, or one-third as much as in the 40 low wind use states.

Many factors influence the price of electricity, so this isn't necessarily proof that states with more wind power will always have smaller electricity price increases. What is clear is that the data stands in strong opposition to those who have tried to make unsupported claims that wind energy or state RPS laws will drive up electricity prices.

Most states are easily meeting or exceeding their RPS requirements, but many times it wasn’t until the RPS was established that the diversification to include renewable energy took off. Xcel Energy, a major investor”owned utility is a case in point, with wind contracts today that exceed its RPS obligation. Most recently, when Xcel secured a wind power purchase in 2011, in approving the contract, the Colorado
Public Utilities Commission stated that “the contract will save ratepayers $100 million on a net”presentvalue basis over its 25”year term under a base”case natural gas price scenario” while providing the opportunity to “lock in” a price for 25 years.

Experience with the Texas RPS introduced utilities to wind. Today, Texas has more than 10,000 MW installed, far surpassing its RPS goal of 5,880 MW by 2015. According to a 2009 report by the Texas Public Utilities Commission, “Wind generation has had the impact of reducing wholesale and retail prices of electricity.”

Related articles:

New study: Wind power can save Midwestern consumers between $3 billion and $9.5 billion annually by 2020, May 23, 2012
PTC, wind power bring cost savings to Iowa utility customers, May 10, 2012
Fact check: Heartland's Kaminsky misguided on wind incentives, April 19, 2012
Fact check: Lomborg lacking on wind's economics, emissions reductions, March 23, 2012
Texas city nears wind and gas power deal, eyes savings, March 22, 2012
Mich. Public Service Commission: Renewable energy cheaper than coal, March 2, 2012
Fact check: American Enterprise Institute FAIL on study of wind costs, February 29, 2012
Fact check: Bryce bypasses facts, bashes clean energy, February 24, 2012
California PUC: Renewable energy procurement up in 2011, costs falling, February 8, 2012
Southeast sees consumer savings, jobs from wind, but tax credit extension needed, January 10, 2012
Is wind power holding electricity costs down?, January 3, 2012
Wind power increasingly competitive and productive, new reports find, November 10, 2011
National lab report: Wind turbine prices drop as designs improve, U.S. supply chain develops, November 1, 2011

 

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