This report explores the true cost of producing electricity from wind power. Rather than creating a new cost estimate, we analyze the findings of prominent cost studies by experts in the energy field. Each study includes different factors in its estimate of the cost of wind power. We break down each of these factors and explain the significance of each. These factors include: capital costs, operation and maintenance costs, capacity factor, transmission costs, baseload cycling, social and environmental costs, and the cost of government subsidies. Other factors are more difficult to quantify, but nevertheless add to the true cost of wind power. Such factors include: opportunity cost of taxpayer dollars, reduced reliability of the grid, and higher electricity prices. We conclude that, when estimating the true cost of wind power, all of these factors should be included.
What is meant by the term “true cost”? When calculating the cost of any energy source, there are many factors to consider. For example, it goes without saying that the costs of construction, operation, and maintenance of the power plant must be considered. The cost of transmitting the power to the consumer must also be factored in. However, not all costs are so easy to identify. The true cost of an energy source also includes hidden costs such as opportunity cost and other, less-obvious factors.
Proponents of wind energy claim that it is superior to traditional forms of power generation such as coal and natural gas. They claim that wind energy is cheaper to produce and it is renewable. Sometimes, when cursory and incomplete cost accounting is used to calculate wind energy’s costs, these claims appear to be correct and wind energy appears to be not only advantageous to consumers, but also friendly to the environment.
The true cost of wind power, however, is what consumers and society as a whole pay both to purchase wind-generated electricity and also to subsidize the wind energy industry through taxes and government debt. The true cost includes both traditional cost accounting and the seen and unseen costs of policies that seek to artificially bolster renewable energy development and production. When examined more closely, many claims about wind energy are found to be indefensible.
To more closely examine the true cost of wind energy, this report will discuss in detail aspects of wind energy that are often overlooked, aspects which lead to dramatic underestimation of the true costs of producing electricity from wind. These include the cost of massive government subsidies and mandates to incentivize development and production of renewable energy. They also include the costs of building transmission lines to the often-remote locations where wind power is plentiful. As important but more difficult to quantify are the costs of reduced reliability. Wind energy distorts the market and drives more reliable energy sources out. Finally, the true cost of wind must also include opportunity costs paid by taxpayers, whose money could have been spent more productively than subsidizing the wind industry.
By including the cost of government subsidies and other hidden costs of wind power, it is easy to conclude that the true cost of wind energy is much higher than many studies estimate. Before the enactment of more policies and mandates that bolster the no-longer-infant wind industry, the true costs of wind power to American taxpayers should be calculated. This will ensure that future policy decisions are based on comparisons of the actual costs and benefits of wind power.