An article in the Wall Street Journal (WSJ) misleads readers into thinking wind provides cheap electricity.
Texas is an ideal location for the use of wind and solar for generating electricity, perhaps one of the best areas in the country. If wind and solar aren’t competitive in Texas, they aren’t likely to be competitive anywhere else in North America.
Texas has areas that are very favorable for generating electricity from wind, and therefore, developers have invested heavily in wind farms. As a result, according to the WSJ article, wind represents 16% of installed capacity in Texas.
According to the Energy Information Administration (EIA), the levelized cost of electricity (LCOE) from wind farms will be 7.3 cents per kWh in 2020, four years from now. Obviously it’s more costly today.
The Institute for Energy Research (IER) has calculated the LCOE from land based, i.e., on-shore, wind today is 10.4 cents per kWh, which more accurately establishes today’s cost of wind power.
The WSJ article says the retail cost of electricity in Texas is 8.6 cents per kWh. How can the retail cost be 8.6 cents per kWh when it costs 10.4 cents to generate electricity from wind?
The answer is straight forward.
- To begin with, wind provides a tiny portion of the electricity used by Texans. The 16% of installed generating capacity doesn’t translate into an equal percentage of electricity produced from wind. The capacity factor in the U.S. is generally less than 30%, but in Texas it’s probably somewhat higher, perhaps 33%. This means that wind contributes around 5% of electricity in Texas … a small amount.
In other words, low-cost natural gas is providing the bulk of electricity, and its what’s creating low-cost electricity for Texans.
- Next, wind farm developers receive a subsidy of 2.3 cents per kWh for the electricity they produce. Wind farm developers can sell their electricity for practically nothing, and still make money. In fact, there have been instances where the wind farm developers have paid ERCOT to take their electricity so that the developers could receive the 2.3 cent subsidy.
It’s this subsidized low-cost that’s contributing to the low-cost of electricity for Texans.
The WSJ article is pandering to environmentalists and distorting the truth, so that people will get the wrong impression about the cost of, not only wind, but also solar. In truth, wind and solar are expensive and unreliable.
This chart shows the real effect of wind and solar where it has been used most extensively, Germany and Denmark. Countries such as Norway, which uses hydro for the bulk of its electricity, have far lower costs.
Depending on the exchange rate, the cost of electricity in Germany is around 3 to 4 times the cost of electricity in the United States.
The WSJ has done Americans a disservice by printing an article that distorts the facts while promoting wind and solar.
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Nothing to Fear, Chapter 9, The Utility Death Spiral, explains why displacing fossil fuels with wind and solar will result in the bankruptcy of Utilities and the possible takeover of the industry by the government.
Nothing to Fear is available from Amazon and some independent book sellers.
Link to Amazon: http://amzn.to/1miBhXy
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