Wind Energy DevelopmentWind Energy DevelopmentThomas Tanton

Sr. Fellow and V.P. Institute for Energy Research

OverviewOverview

• Background• Foreign Oil Displacement?• Job Creation?• Competitive Costs?• Reliability?• Environmental Improvements?

– CO2?

• Why can’t we do what Denmark has done? Or should we?

BackgroundBackground

• IER is a non profit 501 c(3) organization dedicated to historical and forward looking analysis of the intersection of energy, economics and public policy

• We do not accept public funds

• I have 35 years in the field– 28 years Principal Policy Advisor CEC– 3+ years General Manager at EPRI

Foreign Oil Displacement?Foreign Oil Displacement?

• Very little oil is even used to generate electricity <3% (source EIA)

• The little amount of oil that is used is not primarily for energy but for load balancing, start-up, ancillary services and other purposes not displaceable by wind

• Any oil that IS displaced, generally speaking, would most likely be more expensive domestic, not cheaper foreign oil

Job Creation?Job Creation?

• Majority of jobs are temporary construction jobs

• Majority of wind turbines are imported

• Claims of job creation seldom are ‘net’

Competitive Costs?Competitive Costs?

• Contrary to most claims, wind is NOT cost competitive once costs are corrected for high levels of subsidy– 60-65% of the costs are born by taxpayers

• Costs have dropped for wind—but also for everything else, while volatility has increased

• Costs may only be considered competitive if fossil prices are expected to continue to monotonically increase.– Official forecasts do not expect forever higher prices– History suggests not signing 30 year fixed contracts at the top of

the market

Renewables Are Expensive…even with heavy subsidies

Sources: geothermal and solar PV — Western Governors’ Association, June 2004; all others — EPRI, November 2005

Reliability?Reliability?

• Wind and Electrical Demand seldom correlate• Turbine system are highly reliable• Wind can be forecast, but not well

Imposed costs vary by situation and requires complex modeling

Environmental Improvements?Environmental Improvements?

• CO2

– Grid balancing and intermittency require off-design operation of

thermal plants

– Life cycle considerations imply net increase in CO2 with large

amounts of wind (e.g. concrete)

• Birds and Bats

– High mortality of endangered species and other wildlife

• Necessary transmission also may cause unacceptable impacts to

habitat and continuity

Denmark?Denmark?

• Denmark doesn’t really rely on the very high claims of wind usage– Denmark relies on NORDPool for much of its

capacity and balancing and energy is delivered from thermal and hydroelectric

– ~4% of total not 30%

• Denmark is NOT achieving CO2 reductions, in part because of it’s use of wind