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Fact check: Kavulla off target on wind's cost

Fact check: Kavulla off target on wind's cost

In a lengthy Power Engineering magazine opinion article criticizing utility regulation, Travis Kavulla, chair of the Montana Public Service Commission, also discusses the cost of renewable energy. We'd like to set the record straight with a few facts not mentioned by Mr. Kavulla:

– Recently, Alabama Power Co. decided to purchase wind-generated electricity from Tradewind's Chisholm View wind farm in Oklahoma.  The Alabama Public Service Commission reviewed this purchase and commented, “Specifically, the delivered price of energy from the wind facility is expected to be lower than the cost the Company would incur to produce that energy from its own resource (i.e. below the Company’s avoided costs), with the resulting energy savings flowing directly to the Company’s customers.”  The full Commission report is here.

Xcel Energy, a large utility which operates many coal-fired power plants, recently issued a press release announcing a new wind energy purchase.  Entitled “Xcel Energy seeks more low-cost wind energy,” it says in part, “'This proposed purchase contains the lowest-cost wind energy we’ve seen, making it competitive with other energy sources,' said David Eves, president and CEO of Public Service Co. of Colorado, an Xcel Energy company. 'Even though Xcel Energy is ahead of schedule to meet Colorado’s 30 percent renewable energy standard by 2020, we can take advantage of historically low wind prices to give our customers more choice in the energy powering their home and businesses.'”  So, here is an investor-owned utility that operates coal plants saying (1) wind energy is competitive and (2) it is able to meet a 30 percent renewable energy standard and still buy even more wind.

– A recent report from Lawrence Berkeley National Laboratory (LBNL) found that wind turbine prices have dropped sharply in recent years, due largely to the scaling up of turbine size to reduce cost of energy (COE) and the growth of a domestic supply chain as the U.S. dollar has declined against other major currencies.

Mr. Kavulla's piece also serves as a good reminder that wind power generates electricity with no mining or drilling for fuel, no air pollution, no water pollution, no greenhouse gases, virtually no water use, and no hazardous waste. Indeed, the National Academy of Sciences found in a 2009 study that the “hidden costs” (primarily health costs related to air and water pollution) of fossil fuels are $120 billion a year. A healthy and robust debate over energy costs should include these types of costs that are not accounted for in market prices and are ultimately passed along to others.

Finally, Mr. Kavulla mentions the Production Tax Credit for Renewable Energy.   America has a long history of incentivizing the development of new supplies of domestic energy through tax credits.  This includes the Section 29 Unconventional Tax Credit in place for over two decades that played a major role in the growth of coalbed methane (natural gas) in the U.S., including Montana.  The PTC at question here likewise has played a major role in securing a stable investment climate for American wind power that has created 75,000 high-paying wind jobs in place today in over 400 facilities in 43 states.   The PTC has leveraged $60 billion of private investment since 2005 and wind power represents 35% of all the new electricity capacity installed in the U.S. since 2007.  Extending the PTC, currently scheduled to expire in 2012, represents a continued investment in American workers, a growing manufacturing base and the growth of clean, homegrown energy in the U.S.  It is a smart investment with a proven track record of job creation that will benefit the people of Montana, a state with world-class wind resources.

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