WindAction Editorials filed under Impact on Economy
“The combination of the federal PTC and state RPS policies has shielded wind developers from the basic supply and demand forces present in a healthy competitive market. As a result, we are fast-tracking the construction of expensive renewable resources that are variable, operating largely off-peak, off-season and located long distances from where the energy is needed.”
Since 2009, the State of New Hampshire has reviewed three large-scale wind energy facilities totaling 177 megawatts. In each case, the project proponents engaged University of New Hampshire Professor and economist Ross Gittell and his research assistant, Matt Magnusson, to conduct economic impact studies to show the long-term (20-year) benefits the projects would deliver to the local area.
The American Wind Energy Association has made extending the Production Tax Credit ('PTC') its primary focus this year. Documents available on the trade group's website show that about $4 million of its 2012 budget ($30 million) was directed toward securing extension of the PTC. With job growth the number one political issue in the United States, AWEA's strategic plan calls for rebranding of the wind industry as an economic engine that will produce steady job growth, particularly in the manufacturing sector.
The American Wind Energy Association's (AWEA) newly released Annual Market Report for 2010 can be summed up in one word -- Spin!
Last month, the State of Massachusetts approved the most expensive power purchase agreement in the country -- a 15-year contract negotiated between Cape Wind and National Grid to sell one-half the project's 468 megawatts at 18.7 cents per kilowatt hour.
Wind energy development in the United States and worldwide has been touted over the last few years as a key economic engine necessary to move us out of recession and back into a growing market. While energy policy has become a priority at all levels of governance, the focus has shifted away from meeting demand needs in favor of job growth. Governors around the country are pledging millions in public dollars to attract project development, including the chance to become a manufacturing center for wind turbine components.
After nine years of debate and millions of public and private dollars, the decision to permit America's first offshore wind project fell on the shoulders of one man, U.S. Department of the Interior Secretary, Ken Salazar. Hindsight notwithstanding, there was no chance Salazar could disapprove the Cape Wind application. Does anyone doubt the Obama administration would dare to ignore the tsunami of political favoritism already bestowed on the project, no matter how unjustified? And given the administration's stated goal to nurse the U.S. economy back to health through the green movement, a denial of the permit would have unleashed a public firestorm virtually impossible to contain.
Last month, New Hampshire's Gov. John Lynch announced that 25-percent of the electricity powering the state's government buildings will now come from wind power.
One compelling argument favoring wind energy development in rural areas is the opportunity for local economic benefits, especially jobs. Wind energy proponents fervently tout numbers showing hundreds of high-paying jobs created. But as with many of the benefits attributed to wind energy development, the details tell a different story. Most of the jobs in a wind energy project are created during the construction phrase. These jobs are temporary lasting between 6 and 18 months. High-paying jobs, in particularly are usually filled by people who come to the area for short periods of time to assemble the towers, turbines, and associated electronics and to build substations and transmission lines necessary to connect wind turbines to the electric grid. Few permanent jobs are created.
Citing credit woes, Noble Environmental Power LLC of Essex Connecticut announced last week that all work was suspended at its 14-turbine wind farm under construction in Bellmont, New York. The turbine foundations have already been laid at the site and Noble indicated work would not resume until summer 2009. Contractors for Noble have informed Windaction.org that, while the announcement was sudden, there were indications the firm was experiencing cash flow problems months ago.
Robert Bradley, in his seminal policy paper entitled Renewable Energy Not Cheap, Not "Green", discusses the Department of Energy's 1976 study which estimated wind power could supply nearly 20% of the U.S. electricity by 1995. By 1996, wind represented 1/10th of 1 percent share with clear signs the market was in decline. In 1997 Enron entered the picture with its purchase of Zond, one of the largest developers of wind generation. This, coupled with new state and federal restructuring initiatives that funneled billions into new subsidies for wind and other renewables, resuscitated the near-dead market.
Two different, but very similar news reports (CBS News: Winds of change blow in Texas and NPR: Winds of change blow into Roscoe, Texas) were published in the last two weeks. Each highlighted the economic opportunities resulting from wind energy development in West Texas and the revitalization of otherwise land-rich, resource-poor communities of the State. CBS termed it a "wind energy gold rush".
The wind industry has incented rural communities to host wind energy installations with promises of jobs for local workers, the bulk of which are short-term, construction-related positions. After the facility is operational, only 1-2 people are employed full-time near the site per 50 megawatts of installed capacity. The facility largely runs unattended and is monitored remotely from locations in Europe and elsewhere.
In the rush to legislate renewable energy mandates, state legislators failed to consider needed infrastructure. Onshore wind plants are typically built hundreds of miles from load centers in areas with little or no transmission. Now states are scrambling to socialize the cost of transmission, a cost normally borne by the generators. Burdening ratepayers with this is contrary to the rules and recommendations held by utility commissioners as recently as a few years ago. Comments to FERC by the New England Conference of Public Utilities Commissioners and the Vermont Department of Public Service ( http://www.windaction.org/documents/11629 ) make the point this way: "If a generator is not required to pay for transmission upgrades and the cost is instead to be socialized across all load, then generators will choose their location based on other factors, such as where land is cheaper or emissions permitting is easier, rather than where good transmission planning or market economics would dictate. On the other hand, if the cost of transmission associated with locating in these other areas were borne by the generators themselves, these economic tradeoffs would be internalized and economic location would be more likely to occur. As currently proposed, the costs are not borne by generators, which could lead to uneconomic grid expansion." Further skewing the economics, in the case of wind, 70% of the costly transmission line's capacity will be un-utilized.
In a July 9, 2007 Wall Street Journal article ( http://www.windaction.org/news/10617 ), wind power was described as "basically a cottage industry, until recently", and the race to build wind facilities worldwide has created a turbine shortage. Manufacturing of the turbines, and their 8000 specialty parts, is being squeezed, raising prices and the potential for quality problems. Current reports from Germany ( http://www.windaction.org/news/11519 ) detail quality problems with installed turbines, "...wind power providers and experts are now concerned. The facilities may not be as reliable and durable as producers claim... Fractures form along the rotors, or even in the foundation after only limited operation". Last week, a Siemens wind turbine at PPM's Kondike III site in Oregon collapsed killing one person and seriously injuring a second ( http://www.windaction.org/news/11547 ).
Energy policymakers in Massachusetts, Delaware, and elsewhere see a future where 1000’s of giant wind turbines, blades reaching to 300-feet in length, will populate the deep waters off the U.S. coast from Maine to Cape Hatteras (NC) and beyond. They envision wind energy as the primary source of electricity for eastern population centers. The fickle nature of wind will be 'corrected' by building new onshore gas plants that generate during low wind conditions. Little has been voiced publicly about this eco-dream. Is it even possible using existing infrastructure? or will a new super-grid need to be created? How much of the enormous cost will be borne by the public? While money is being expended today, have there been policy and technical discussions reviewing the feasibility? There is very limited experience worldwide for deep-water wind development and none in the U.S. It's worth noting that the near-shore Cape Wind (MA) and LIPA (NY) projects, both heavily reliant on public subsidies and existing infrastructure, will each cost nearly a billion dollars to build. The one Texas offshore proposal, with subsidies, has been deemed economically unviable and scrapped by the developer.