Setting the Context: Obama’s State of the Union

The Pickens Plan calls for ending America’s “addiction” to foreign oil through government incentives to encourage energy conservation, a foster a huge increase in electrical generation from wind and solar, and to convert America’s vehicles to run on natural gas. (There are many problems with the Pickens Plan, but in this post we are going to focus just on the mindset behind the man pushing it, and his casual attitude toward energy prices for consumers.)

In his State of the Union address, President Obama—though not mentioning Pickens by name—clearly endorsed a compatible energy policy:

But with only 2 percent of the world’s oil reserves, oil isn’t enough. This country needs an all-out, all-of-the-above strategy that develops every available source of American energy. (Applause.)

A strategy that’s cleaner, cheaper, and full of new jobs. We have a supply of natural gas that can last America nearly 100 years. (Applause.)

…The development of natural gas will create jobs and power trucks and factories that are cleaner and cheaper, proving that we don’t have to choose between our environment and our economy. (Applause.)

…

Now, what’s true for natural gas is just as true for clean energy. In three years, our partnership with the private sector has already positioned America to be the world’s leading manufacturer of high-tech batteries. Because of federal investments, renewable energy use has nearly doubled, and thousands of Americans have jobs because of it.

…

I will not cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here. We’ve subsidized oil companies for a century. That’s long enough. (Applause.)

It’s time to end the taxpayer giveaways to an industry that rarely has been more profitable, and double-down on a clean energy industry that never has been more promising. Pass clean energy tax credits. Create these jobs. (Applause.)

Later on, in remarks at an Air Force base in Colorado, Obama continued to push for more use of natural gas to help America make the ultimate transition to “clean” energy such as wind and solar.

Putting aside the absurdity of Obama’s proposals—for example raising taxes on efficient energies in order to subsidize inefficient ones, all in the name of economic growth and job creation—it’s easy to see why T. Boone Pickens feels that he’s finally getting some respect from important people. Now that we’ve set the stage, we can explore the implications of Pickens’ views on energy prices.

Pickens on Higher Heating Costs: Let Them Eat Wind

In the beginning of the Squawk Box interview, co-anchor Becky Quick explained to the viewers that Pickens had been vindicated by the president’s proposals to effectively implement the Pickens Plan, three and a half years after the Texas oil man first announced it. Pickens modestly accepted these accolades, and spoke matter-of-factly of the trucking fleet’s transition to natural gas, because it was currently cheaper than diesel. But then Ms. Quick raised some concerns about natural gas prices rising and upsetting this trend. Pickens’ response is quite revealing. Here’s the relevant exchange (with Quick’s slip of the tongue edited out of the transcript for brevity), starting around 1:30 in the interview:

Becky Quick: But Boone, natural gas prices are so cheap at this point, that you have talk this week about some of the companies starting to shut in [natural gas]…Prices are so cheap at this point, to be shutting in some of the natural gas, what’s that going to do if prices start to come back as a result, and come back higher?

T. Boone Pickens: Well they probably will come back higher Becky, but my gosh, the parity oil-to-gas is 6-1, it’s now 40-1. So you have plenty of room to come back, go up. See if you move back up to $6 on natural gas, you can start to do wind again.

To understand the significance of Pickens’ nonchalant remarks, note that he is casually discussing practically a doubling of natural gas prices from current levels:

US Natural Gas Wellhead Price (nominal $/1000 cubic feet, monthly)

Source: Energy Information Administration

T. Boone Pickens is personally not afraid of such a massive jump in natural gas prices, since the country could then “start to do wind again.” But in reality, a roughly $3 increase in natural gas prices would be devastating to the U.S. economy, particularly in its current condition.

According to the EIA’s most recent data [.pdf], as of November the US in the previous 12 months had consumed 24.6 trillion cubic feet of natural gas. Using back-of-the-envelope calculations, we can see that a $3 increase in prices (per thousand cubic feet) would raise energy expenses by about $74 billion for consumers and businesses, with the major components as follows:

• 20% of the total—about $15 billion—would fall on households who use natural gas for heating.
• 13% of the total—$10 billion—would fall on commercial consumers of natural gas for heating.
• 28%, or $20 billion, would fall on industrial consumers, such as manufacturing plants.
• 31%, or $23 billion, would hit the utilities that generate electricity using natural gas.

The above numbers come from simply multiplying the latest 12-month consumption patterns of natural gas, by the hypothetical increase in prices that T. Boone Pickens discussed in his CNBC interview. In reality, with rising prices households and businesses might switch to other fuels and thus mitigate the blow. Furthermore, economists know very well that we can’t naively assume that the ultimate burden of a price hike will fall on the immediate party in question. For example, electric utilities using natural gas would surely pass on a big spike in operating costs to their customers in the form of rate increases.

Despite these caveats, it is clear that natural gas prices of $6 would severely constrain the nation’s consumers of the fuel, whether households or businesses. However, Pickens needn’t worry about the overall economic blow coming from the transportation sector: In November 2011, only 0.13% of the nation’s natural gas consumption came from vehicles running on the fuel. This fact shows just how far the market currently is from Boone’s vision for the future.

Conclusion

If a particular energy price, whether for a barrel of crude oil or a cubic foot of natural gas, is a true free market price, then it is neither good nor bad. It is simply information that expresses the underlying conditions of available supply, technological know-how, and consumer demand.

In his CNBC interview, T. Boone Pickens acts as if he is a disinterested observer, predicting the inevitable development of the energy sector following market forces. Yet this isn’t true at all. Pickens for years has been telling the government to use its powers to change the market outcome, in favor of natural gas, wind, and solar power—and lately the Obama Administration seems to be heeding his advice.

Market forces will steer the energy sector in the efficient direction that best satisfies consumers. If it truly makes sense to convert the trucking fleet to run on natural gas, then price signals will lead—as if by an Invisible Hand—the owners of shipping companies to do just that. Yet Pickens, Obama, and other interventionists don’t want to rely on the decentralized market process. Instead they want to use the quite visible and heavy hand of the federal government to pick energy winners and losers, and to raise prices for consumers in the process.

Source: Energy Information Administration, Updated Capital Cost Estimates for Electricity Generation Plants, http://www.eia.gov/aer/pdf/pages/sec8_22.pdf

The Cape Wind Project[iii]

Cape Wind was proposed in 2001 as a 468-megawatt wind farm consisting of 130 turbines, each with a maximum capacity of 3.6 megawatts, standing 440 feet tall in the Nantucket Sound, off Cape Cod, Massachusetts, covering 25 square miles.[iv] Because the turbines are to be located more than 3 miles offshore, it is under federal jurisdiction as well as state jurisdiction.[v] The project is estimated to cost $2.5 billion, or over $5,300 per kilowatt. Overall, the project is estimated to have a maximum delivered capacity of 454 megawatts based on a design wind velocity of between 30 and 55 miles per hour.[vi] Based on the average wind speed of the Nantucket Sound of 19.75 miles per hour, however, the average generation capacity of the Cape Wind project would be approximately 182.6 megawatts.[vii] At this capacity, the Cape Wind project would annually deliver about 1,600 gigawatt-hours of energy.[viii]

The project has been opposed by organizations and individuals citing the following problems: hurting views from homes and beaches, lowering of property values, hurting the fishing and yachting industries and marine life, being too close to shipping lanes, privatizing of public property, and ruining ancient religious rituals of the Wampanoag Indian tribes.[ix] Proponents for it argue that it will displace oil and natural gas generation, gain 160 permanent jobs, and create a stable price that would be a hedge against fossil fuel prices.[x]

Buyers and Skeptics

The project has one primary buyer, National Grid, the state of Massachusetts’ largest electric utility, who is slated to purchase half of the output from the project, at a cost of 18.7 cents per kilowatt hour beginning in 2013 and then increasing annually by 3.5 percent in a 15-year deal. That amount is twice what the utility pays for power from fossil fuels and it would add 1.7 percent to the electricity bill of residential customers.

The other half of the project output is up for grabs. The best prospective customer is NStar, the state’s second largest utility, but the company is uninterested because it can purchase renewable energy elsewhere for less and still satisfy the state’s Green Communities Act[xi] and the state’s mandate of obtaining 15 percent of its power from renewable energy by 2020. According to NStar’s spokewoman, “We just want to make sure that we are promoting renewables in the region…but also being mindful of costs for our customers.”[xii] NStar’s 10-year contract with TransCanada, owner of the Kibby Mountain wind farm, for example, is for onshore wind power at 10.5 cents per kilowatt hour.[xiii] NStar, in its recent solicitation for bids from renewable energy generating sources, received 113 bids totaling 9 million kilowatt hours, or 28 times more than it needed to meet state goals next year.[xiv]

Options for Cape Wind

The owners of Cape Wind have two options: either solicit enough buyers to construct the wind farm as planned or scale back the size of the wind farm, increasing the cost to as much as 19.3 cents per kilowatt hour.[xv] Without support from NStar for the other half of the project, it is likely that the Cape Wind owners would need to get buyers from many smaller utilities and government agencies. This difficulty of finding customers for the power is likely to put a damper on other offshore wind power projects being considered off the U.S. east coast.

Onshore Wind

By the end of 2009, the United States had over 35,000 megawatts of onshore wind generating capacity, having added almost 10,000 megawatts in 2009, according to the American Wind Energy Association.[xvi] But, in the third quarter of 2010, only 395 megawatts of new onshore wind capacity had been constructed, the lowest figure for a quarter since 2007. New wind projects through the third quarter in 2010 were down 72 percent from 2009 levels. Part of the reason for the downturn was the expiring renewable tax credit at the end of this year, which was resurrected for an additional year by the passage of the bill extending the Bush tax cuts. Despite the 35,000 megawatts already on line, wind energy cannot make it in the market without government support.[xvii]According to the Energy Information Administration, over 3 times more coal-fired generating capacity and over 3 times more natural gas-fired generating capacity were added in the first 9 months of 2010 than wind generating technology.[xviii]

Another factor in wind’s difficulty to compete against fossil technologies is low natural gas prices sparked by newer drilling techniques that have produced sufficient new natural gas reserves from shale deposits to supply U.S. demand for years.[xix] In the face of these low prices, regulators in several states including Florida, Idaho, Kentucky, Rhode Island and Virginia, whose job is to protect consumers from unreasonable rates, have slowed or rejected deals to buy renewable power. In Rhode Island, for example, the public utility commission rejected an offshore wind project that would have cost 24.4 cents a kilowatt hour, compared to 9.5 cents a kilowatt hour for power from fossil fuels. In Kentucky, the public service commission rejected a renewable deal because it would have increased a typical residential customer’s rates by about 0.7 percent.[xx]

Other factors affecting renewable projects are lower demand and tighter loan terms due to the credit crunch. Electricity demand in the United States was down almost 1 percent in 2008 from 2007 levels, followed by a 4 percent reduction in 2009 from 2008 levels. For the first 9 months of 2010, electricity demand was at the same level as in 2009.[xxi] Interestingly, assets are being pulled from renewable funds in favor of conventional energy stocks. European governments that had been into wind and solar projects over the past decade have cut their subsidies for renewable technologies and the Chinese have become competitive in these markets, undercutting their competitors, making renewable funds less lucrative than they had been in the past.[xxii]

Conclusion

Wind energy, though one of the least expensive renewable generating technologies, cannot make it in the market place without government subsidies. This is clearly shown by the decrease in onshore and offshore wind projects in 2010 even though there are mandates in 29 states to generate electricity from renewable technologies. The recession has made utilities such as NStar ever vigilant to keep electricity prices in check and yet meet laws and regulations. Although our politicians recently voted to extend renewable subsidies, those subsidies appear not to be sufficient to support offshore wind development. So, it will be interesting to watch the market dynamics of offshore wind in the future. If it cannot survive in Massachusetts, a state that has one of the highest electricity prices in the country, then where?

[i] Associated Press, Wanted: Buyer for controversial Cape Wind energy, December 19, 2010, http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/12/19/national/a081715S27.DTL

[ii] Energy Information Administration, Updated Capital Cost Estimates for Electricity Generation Plants, http://www.eia.doe.gov/oiaf/beck_plantcosts/index.html

[iii] For a comparison of the energy output of Cape Wind versus an offshore natural gas well, see http://www.instituteforenergyresearch.org/2010/04/14/production-from-developing-manteo-prospect-offshore-north-carolina-vs-equivalent-wind-farm/

[iv] http://www.boemre.gov/offshore/AlternativeEnergy/PDFs/FEIS/Section2.0DescriptionofProposedAction.pdf

[v] Wikipedia, Cape Wind, http://en.wikipedia.org/wiki/Cape_Wind

[vi] http://www.boemre.gov/offshore/AlternativeEnergy/PDFs/FEIS/Section2.0DescriptionofProposedAction.pdf

[vii] Ibid.

[viii] Ibid.

[ix] Wikipedia, Cape Wind, http://en.wikipedia.org/wiki/Cape_Wind and Associated Press, Wanted: Buyer for controversial Cape Wind energy, December 19, 2010, http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/12/19/national/a081715S27.DTL

[x] Ibid.

[xi] http://mastatelibrary.blogspot.com/2010/06/green-communities-act.html

[xii] Associated Press, Wanted: Buyer for controversial Cape Wind energy, December 19, 2010, http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/12/19/national/a081715S27.DTL

[xiii] Associated Press, Wanted: Buyer for controversial Cape Wind energy, December 19, 2010, http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/12/19/national/a081715S27.DTL

[xiv] Ibid.

[xv] Ibid.

[xvi] American Wind Energy Association, http://www.awea.org/documents/factsheets/Market_Update_Factsheet.pdf

[xvii] The Wall Street Journal, The Wind Subsidy Bubble, December 20, 2010, http://online.wsj.com/article/SB10001424052748703395204576023820064646268.html

[xviii] Energy Information Administration, Electric Power Monthly, Table ES3, http://www.eia.doe.gov/cneaf/electricity/epm/epm_sum.html

[xix] See forthcoming blog post on the Annual Energy Outlook 2011 forecasts, indicating that technically recoverable shale gas resources are estimated to be 2.3 times the level assumed in Annual Energy Outlook 2010.

[xx] New York Times, Cost of Green Power Make Projects Tougher Sell, November 7, 2010, http://www.nytimes.com/2010/11/08/science/earth/08fossil.html?ref=energy-environment

[xxi] Energy Information Administration, Monthly Energy Review, http://www.eia.gov/mer/pdf/pages/sec7_5.pdf

[xxii] Bloomberg, Black Rock Blames Credit Crisis For Clean Energy Fund Outflows, December 24, 2010, http://www.bloomberg.com/news/2010-12-24/blackrock-blames-credit-crisis-as-record-outflows-hit-clean-energy-funds.html

Climate alarmism, in particular, has failed as a voter issue, and we are left with the stubborn energy reality that politically correct wind and solar energy is expensive, unreliable, and quantity-constrained. This is the same verdict as rendered by William Stanley Jevons in his 1865 classic, The Coal Question. Renewable energy is just not ready for prime time—and not because human ingenuity somehow failed.

The articles in the Journal’s ten-page section suggest where the new policy debate is headed. There are the obligatory pieces on wind and solar (the special Journal energy sections used to be practically nothing but), and energy efficiency is covered for sure. But there are features on Brazil’s push for offshore drilling and Alberta’s oil-sands boom (“A Place Where Outsiders are Welcome”). This is where the real action is.

The future belongs to the efficient, and that means oil, gas, and coal. The real technology revolution is occurring day-to-day in the carbon-energy (read energy-dense) family, not outside of it.

Stay tuned: government-dependent energies are in for a hard ride, and consumer-driven energies are poised for growth. Why? Because consumers-qua-voters want it—and policy makers want to be elected and stay elected.

“Offshore of Louisiana, we have proven, affordable, reliable energy resources that provide thousands of Americans with high-paying jobs and contribute billions to the Federal treasury.  Offshore of Maryland, some have proposed the development of an intermittent resource characterized by high costs, low reliability, and complete dependence on taxpayer subsidies.  Yet for some reason, this Administration continues to favor the unreliable, expensive, and, to date, mostly mythical resource and punish the affordable, reliable, and always dependable resource.

“Salazar’s sad attempt to justify his permitorium on offshore oil and natural gas production is bad enough by itself.  But to couple it in the same week with an announcement about streamlining the permitting process for an expensive, unreliable product that is only kept afloat through government, like wind power, is absurd.”

For a closer look at the efficacy of government subsidies for renewable energy in Spain, check out IER’s new video.

The New York Times has come to grips with the economic realities of renewable energy.  Matthew Wald and Tom Zeller Jr. write:

Even as many politicians, environmentalists and consumers want renewable energy and reduced dependence on fossil fuels, a growing number of projects are being canceled or delayed because governments are unwilling to add even small amounts to consumers’ electricity bills.

And

Electricity generated from wind or sun still generally costs more — and sometimes a lot more — than the power squeezed from coal or natural gas. Prices for fossil fuels have dropped in part because the recession has reduced demand. In the case of natural gas, newer drilling techniques have opened the possibility of vast new supplies for years to come.

The bottom line is that consumers demand cheap energy, especially during tough economic times.  Local utilities don’t want to pay more, either:

In April, for example, the state public utilities commission in Rhode Island rejected a power-purchase deal for an offshore wind project that would have cost 24.4 cents a kilowatt-hour. The utility now pays about 9.5 cents a kilowatt hour for electricity from fossil fuels.

As Wald and Zeller reluctantly note, the only way wind and solar energy can compete is if the government forces consumers to purchase renewable energy.  This is a bad idea for two reasons. First, it will make energy more expensive for everyone – especially the poor. Second, a renewable energy mandate will reduce incentives for wind and solar energy producers to drive down long term costs. If you are guaranteed market share, why put forth as much effort to improve your product?

We need to ask ourselves whether we want the government forcing people to pay high premiums for wind and solar energy.  In a free society, the answer should be a resounding “No.”

With only a few short weeks left before Congress adjourns, the wind lobby is ramping up its efforts to convince policymakers of the need to impose a federal renewable energy mandate that would guarantee a government-induced market share for wind energy companies.  That is understandable, considering that unless Congress acts now (or during a lame duck session), future prospects for such a federal mandate are about as dim as the incandescent light bulb’s.

The case for wind energy is simply not being made.  The latest example of this comes from Denmark.  A September 12 article in the U.K. Telegraph entitled An ill wind blows for Denmark’s green energy revolution exposes this fact.  It appears the Danish people aren’t as enamored with their renewable experiment as Big Wind would like us to believe.

Thanks in part to the windfarm subsidies, Danes pay some of Europe’s highest energy tariffs – on average, more than twice those in Britain. Under public pressure, Denmark’s ruling Left Party is curbing the handouts to the wind industry.

The article further describes how the dramatic increase in wind generation has yielded little environmental benefit in spite of the dramatic rise in energy costs for Denmark’s ratepayers.

So most of the wind electricity Denmark generates has to be exported, through interconnection cables – to Germany, to balance the fluctuations in that country’s own wind carpet, or to Sweden and Norway, whose entire power system is hydroelectric, and where it can be stored. (The Swedes and Norwegians use it themselves – or sell it back, at a profit, to the Danes. If they use it themselves, there is, of course, no saving whatever of C02 – because all Norway and Sweden’s domestically-generated hydropower is carbon-neutral anyway.)

We have heard this story before.  One year ago this month, IER commissioned a study which came to similar conclusions about the Danish wind experience.  Of course, this study, part of an overall series on renewables, was roundly criticized by both Big Wind and Big Green because it inconveniently undermined the premise of their public relations campaign for more federal giveaways, which goes a little something like this:

The federal government must support subsidies and mandates for renewables because the United States is falling behind countries like Spain, Denmark, Germany, Japan, and China in the race towards a clean energy future.

This has been the rallying cry from Big Wind and its allies in the push for more federal involvement in the renewable industry.  But with time running out on the legislative calendar, and as more Americans discover the truth about the high costs and scant benefits of the renewables experiment in other nations, their message has morphed into one of despair and distress.

WASHINGTON – Over the August recess, proponents of a national renewable electricity standard (RES) went on an all-out push to convince policymakers that a federal mandate for expensive and often unreliable energy consumption was a good deal for consumers and domestic manufacturing. While they may have been successful in lobbying a handful of politicians to introduce a bipartisan RES bill, the facts surrounding such a proposal have not changed.

Currently, 29 states have renewable electricity mandates; seven more have renewable electricity “goals.” Of these states, 36 percent are on track or are meeting their mandates, while 39 percent are not. Interestingly, 19 percent of states can’t say definitively either way. In all, electricity prices are nearly 40 percent higher in states with renewable electricity mandates than in states without.

“No matter how you package a renewable electricity mandate, it’s a raw and expensive deal for the American people,” said Thomas J. Pyle, president of the market-based Institute for Energy Research. “We call it a ‘mandate’ for a reason – and it’s not because it’s so cheap, easy and reliable that its outcomes would have been delivered through natural, voluntary means without the long-arm of government reaching into the back-pocket of its citizens.”

Internationally, studies released over the past two years in Spanish, Denmark and Germany show the expensive nature of wind and solar generated electricity. In Spain for example, estimates suggest that government subsidization of expensive, renewable energy cost twice as many jobs as could have been created if those resources were diverted in a different way. The solar industry has since collapsed in Spain, a function of the central government’s decision to cut subsidies.

“According to the Department of Energy, subsidies for wind power are $23.37 per megawatt hour, compared to 44 cents for traditional coal, 25 cents for natural gas and petroleum liquids, 67 cents for hydroelectric power, and $1.59 for nuclear. Despite these generous handouts, wind remains uneconomic. For solar, the numbers are even more startling,” continued Pyle. “While we hope one day these expensive forms of energy will one day be economically viable, the fact remains that even with a generous handout from Uncle Sam, they can’t stand on their own two feet. The question must be asked: At what cost should the taxpayers be responsible for a technology that can’t pass the market test?”

###

FOR IMMEDIATE RELEASE:
September 21, 2010
CONTACT:
Laura Henderson 202.61.2951

—Marcello Truzzi

How can an ancient source of energy, which continuously destabilizes the balance between supply and demand, is highly variable and unresponsive, and provides no capacity value while inimical to demand cycles, effectively replace the capacity of modern machines and their fuels, in the process removing significant amounts of greenhouse gas emissions that are the by-product of the burning of those fuels?

This section will discuss the nature of the scientific method and show that there are a number of challenges to the claims wind technology can abate meaningful greenhouse gas emissions, challenges that require access to actual wind performance data showing how wind affects thermal behavior throughout the grid. Any explanation about causation must honestly and transparently account for all variables at play. It should not consist of cherry picked items favorable to a particular agenda while ignoring other, less favorable factors. Dr. Truzzi (above) also recounted who is obligated to do what in the process of investigating, vetting, and validating explanation:

“In science, the burden of proof falls upon the claimant; and the more extraordinary a claim, the heavier is the burden of proof demanded. The true skeptic takes an agnostic position, one that says the claim is not proved rather than disproved. He asserts that the claimant has not borne the burden of proof and that science must continue to build its cognitive map of reality without incorporating the extraordinary claim as a new “fact.” Since the true skeptic does not assert a claim, he has no burden to prove anything. He just goes on using the established theories of “conventional science” as usual. But if a critic asserts that there is evidence for disproof, that he has a negative hypothesis—saying, for instance, that a seeming [paranormal] result was actually due to an artifact—he is making a claim and therefore also has to bear a burden of proof.”[i]

AWEA’s extraordinary claim is this: That an ancient source of energy, which relentlessly, continuously, destabilizes the balance between supply and demand, is highly variable and unresponsive, and provides no capacity value while inimical to demand cycles, can effectively replace the capacity of modern machines and their fuels, in the process removing significant amounts of greenhouse gas emissions that are the by-product of the burning of those fuels.

This claim is particularly egregious given that wind does not even provide modern power performance–only desultory energy. Since energy is the ability to do work and power is the rate work is done, wind technology delivers fluctuating power at a rate appropriate for 1810, not 2010.

The assertion that wind technology is a necessary, let alone sufficient, cause of reductions in the use of fossil fuels and their various emissions cannot withstand even casual scrutiny, for there are, in virtually every case, other much more plausible causes for any CO₂ or fossil fuel reductions—viz, a falling away of demand, substitution of other fuels, improvements in conventional machine efficiencies, even changes in weather conditions. Even more bizarre than AWEA’s extraordinary claim is its assault on the bedrock scientific principle of refutability, what scientists call “falsifiability.” Any claim about truth in the material world must be testable using standards of empirical evidence to determine if it is false. Because an assertion is “falsifiable” does not mean it is false. Rather, it means that if the statement were false, then its falsehood could be demonstrated.

By hiding the way wind affects overall grid thermal behavior behind proprietary confidentiality laws, not allowing disinterested, independent observations of the relevant phenomena, wind’s limited liability companies remain mired in what Feynman once called “cargo cult science.” AWEA could claim there are 1352 angels sitting on a pin in Nashville. But if that pin were sealed away in a safe deposit box controlled only by AWEA and the bank, how could anyone test it for truth? What is even more outrageous is the way government has abetted this absurdity, passing laws assuring “confidentiality,” while regulators look the other way and the Department of Energy engages in promotional, very hypothetical, wind “studies” alienated from reality.

With over 100,000 massive wind turbines around the world—35,000 plus in North America—not one coal plant has closed due to the installation of any wind projects. Nor is there empirical evidence that there is less coal burned per unit of electricity produced as a specific consequence of wind. Ontario has long promised to retire (but has never been able to do so) all its coal plants. Officials tout that they will be replaced by wind. To hedge its renewable energy bet, the Ontario government is building natural-gas facilities as insurance against new wind projects. In other words, the province expects to replace coal with natural gas, not wind. The latter could not exist without either hydro, which presently provides the province about 25% of total generation (wind is about one percent) or flexible natural gas generators. Projections by the Ontario Power Authority depend upon planned conservation savings and natural gas, not wind, as a means of displacing coal. Similarly, boasts by the former governor of Kansas that her state would not approve a new coal plant because of its increasingly expansive wind projects conveniently forgot to mention how the state had planned to increase its importation of natural gas–at higher cost.

Many new coal plants are in the offing, both in the United States and throughout the world—even in Kansas, since the new governor, “recognizing the need for baseload power,” struck a deal allowing one new coal plant in the western part of the state.[ii] Depending upon government sanctioned secrecy of its performance data and therefore confident that there would be no fact checking in the real world, AWEA has exploited the arcane, very complex nature of greenhouse gas emissions—arcane because so few have knowledge about it and complex because of its incredible scale and the difficulties involved with actual measurement. It then produced highly selective evidence based upon a series of hypothetical projections, mathematical models with incomplete information, and well-crafted but ultimately vacuous statements such as “one of the universally recognized and uncontestable benefits of wind energy….” Everyone should dust off and reread Darrell Huff’s classic, How to Lie with Statistics.

LET’S GET REAL

Wind technology is NOT universally recognized for its ability to reduce CO₂ emissions, for many have contested that presumption. And, in the wake of Bryce’s article, many more will soon join the fray. According to their calculations, whatever wind produces will replace some existing conventional generation for a brief and highly fluctuating time; but in terms of overall fuel use, wind production rarely “saves” anything and, in most cases, as shown in the Bentek study, requires that more fuel be consumed in highly inefficient ways over time. The Bentek study is supported by the work of engineers like Kent Hawkins in Canada (here and here), Peter Lang in Australia (here and here), Bryan Leyland in New Zealand, Jim Oswald in Britain, C. le Pair and Kees de Groot in The Netherlands, and several studies in Germany, Spain and Denmark, some of which are summarized in Bryce’s latest book. Responding to both the letter and spirit of Truzzi’s charge, critics of wind technology not only have cast doubt upon AWEA’s claims, showing that the organization has not met the requisite burden of proof, but they also offer a means of testing their thesis that wind does not offset much CO₂. Lang, Le Pair/De Groot, Oswald, and Hawkins have independently developed differing methodologies for assessing wind’s potential to engage greenhouse gas emissions, and they are in remarkable agreement about their conclusion: that the higher wind penetration on virtually any grid system, the greater potential for more CO₂ emissions than would be the case without any wind at all. These methodologies now must be tested against reality, made so difficult because of proprietary confidentiality laws that shield wind performance activity from critical scrutiny. Thus far, only Bentek has been graced with this opportunity. Consider just a few of the questions that must be answered and the issues that must be properly accounted for, at minimum:

• The amount of conventional generation necessary when wind is producing nothing?

• The amount of conventional generation necessary to infill the gap between when a 100MW wind project is producing, say, 50MW in one minute and, minutes later, only 40MW?

• The amount and pace of conventional generation that must be withdrawn when that wind project increases its yield quickly, moving, say, from producing 10MW in one minute and, 15 minutes later, 80MW? This may not be consequential for any grid in terms of security, particularly large grids like the PJM with over 140,000MW of peak demand generation. But even this relatively trifling flux has cost and emissions consequences, which should be properly assessed.

In most cases around the country, the answers will involve coal plants, as they do in Texas and Colorado, Minnesota and, especially, Iowa, working highly inefficiently. The heat rate penalties involved logically lead to more fuel use—which exhausts more CO₂ emissions. However, even in those areas where natural gas generators can serve as the principle means of balancing wind flux, inefficient cycling would remain an issue, subverting CO2 emissions offsets, as Lang and Hawkins predict. Logic also dictates, in answer to these questions, that any grid must be able to support the entire range of wind flux–from zero to the highest installed wind capacity. Therefore, a grid must have a 1:1 compensatory generation for wind available at all times. Moreover, with more wind penetration, additional conventional generation must be brought on board to keep the grid’s reserve margins intact. AWEA’s footnoted statement that there is existing reserve capacity available to cope with the loss of a large generating set that can be used to “back up” wind, is seriously misleading. Such reserves provide for grid security; using them to mollycoddle wind flux should be a breach of priority and protocol. In the real world, wind can only be a small bit player in a much larger machine complex, a complex made more inefficient because of wind caprice.

Allowing researchers access to wind performance data (wind speeds, etc) at appropriate time intervals will advance the cause of knowledge. But it will also have practical policy uses, for it would permit the public subsidies now provisioning wind projects to be indexed to functional measurements showing how much CO₂ and fossil fuel wind actually reduces, so that the public—and policy makers—would know the value obtained for those tax dollars. It would also inform the various renewable portfolio standard laws, which now only require “deployment” of technologies like wind. The way such laws are presently written, there is nothing whatsoever requiring wind to “do” anything, nothing mandating that wind output show that it, and nothing else, is responsible for reducing CO₂ emissions and fossil fuel consumption. (This is equally true for Renewable Energy Credits and stock portfolio reports.)

Since there is no physical accountability, RPS laws today could mandate deployment of pixie dust, subsidize it, and obtain the same “benefit” presently derived from wind. Looking at the evidence provided on behalf of wind technology, which is at best equivocal, and critical analyses like Bentek’s that expose the technology’s limitations, perhaps it’s fair to conclude by extending AWEA’s distasteful analogy. Those who claim that wind technology can abate meaningful levels of CO₂ emissions would admire the three-pack a day guy who decides to improve his health by smoking four packs of filtered cigarettes instead. ——————————————————————————————————-

The following provides links to the other posts in this series as they are published:

Part I – Windpower on the Firing Line

Part II – Getting to the Facts on Emissions Reductions

Part III – Further Analyses

Part IV – (This post)

ENDNOTES

[i] Marcello Truzzi, “On Pseudo-Skepticism.” Zetetic Scholar. December 13, 1987, pp 3–4.

[ii] http://green.blogs.nytimes.com/2009/05/05/a-deal-on-coal-in-kansas/

SCIENCE IS THE DISINTERESTED SEARCH FOR THE OBJECTIVE TRUTH ABOUT THE MATERIAL WORLD.

– Richard Dawkins

This post in our series looks at how the integration of wind variability affects thermal activity on the grid, favors flexible natural gas generators, and influences economic dispatch and the spot market. It also examines how estimates of carbon emissions are derived and summarizes the limitations of statistically based knowledge. It concludes with a discussion of what Energy Information Administration (EIA) actually says about the causes of carbon emission reductions in the country over the last three years

It is true, as AWEA notes, that any wind production must displace some existing generation, but only in terms of electricity–not any of the underlying energy forms transposed into electricity. It is rather due to the stricture that supply match perfectly with demand at all times (and this is another oversimplification of a complicated situation).

Just as the grid must reduce supply in precise increments to keep pace with specific reductions in demand—or increase supply in just the right increments to keep pace with increasing demand, the grid must respond to increased wind penetration, which, to a grid operator, looks much like a reduction in demand. Since wind plants are continuously generating between zero and 100% of their rated capacity in flux, providing who-knows-what for any future time, conventional generation must infill any reduction in wind energy at the precise increment of that reduction and, conversely, it must be withdrawn in increments that match any wind increases.

If wind generation were merely intermittent and unpredictable while producing at a steady rate, it might achieve some of its claims about backing down coal. However, wind’s relentless variability imposes daunting challenges for integration. Clever engineering schemes can mask the problem, but not without imposing increased costs and thermal activity.

Any fossil fuel saved when it is sporadically displaced by wind is often consumed in even greater volume as it is called upon to compensate for wind’s relentless skittering—the phenomenon described by Bentek. Wind existentially reduces the efficiency of these compensatory plants, raising the heat rate penalties of older, less efficient coal plants such that they may be forced to emit 40% more CO₂ than when operating efficiently. Even efficient penalties of 2% can increase emissions up to 16%.[1] Depending upon the fossil-fired plant involved and the circumstances, a reduction in output in response to the addition of wind “can cause a very small reduction in the efficiency of that fossil-fueled power plant,” as AWEA claims. But over time, these inefficiencies accumulate. But where is the evidence for any of this activity in the real world, aside from the Bentek study?

Evidently, AWEA understands and agrees with Bentek’s recommendation that its product would do much better paired with “more flexible, less polluting natural gas units.” The association knows nuclear plants are not designed for load balancing purposes and that cycling coal-fired boilers in a wind following role is just as problematic, as AWEA obliquely conceded.

Yet as Australian engineer, Peter Lang, has shown, even the best possible thermal entanglement with wind, comprised of both open and combined cycle natural gas systems, can save only 15% more CO₂ than can be achieved by the natural gas systems alone, without any wind. However, the direct and indirect costs of replacing coal with such a tandem would insure that all grid-connected Americans would see their utility bills skyrocket, given wind’s capital costs, which, on per kWh production basis, are on a par with nuclear’s.[2]

Inefficient use of natural gas systems with wind, such as responsive open cycle units normally used only at peak demand, would save no carbon dioxide emissions. And as Canadian Kent Hawkins shows, modeling a combination of coal and natural gas for wind balancing results in more carbon emissions than would be the case without any wind, despite wind’s huge capital costs. Moreover, as Lang has said, “ So wind cannot contribute to reducing capital investment in generating plants. Wind is simply an additional capital investment.” And one that seems entirely unnecessary if the goal is reduced CO₂ emissions.

Any valid attempt to measure the effects of wind integration must account for all the variables at play, including what generation wind displaces, what generation is used to follow and balance its volatility, the cycling rates and heat rates, type of fuels, even voltage regulation systems, among other things. All of these back end factors must be tallied and weighed against any initial carbon savings claimed for wind at the front end. Here’s how energy expert Tom Hewson, in an article for POWER magazine, summarized the havoc wind’s presence plays on economic dispatch:

“…new wind generation will displace highest incremental cost generation on the regional powerpool margin. This marginal generator constantly changes throughout the day due to continuing load fluctuations. This constantly changing market makes it extremely difficult to predict what resources would be displaced throughout a given year. Without use of a regional dispatch model in combination with the project generation profile, wind developer consultants

make simplifying and often flawed assumptions. These assumptions often center on the displaced generation being either coal-fired generation or a weighted average regional blend of fossil fuel generation. Given that higher cost gas and oil can be on the margin, a weight average fossil fuel average that better reflects the dominant baseload generation resources (more heavily coal based) result in even overestimating displaced emission characteristics for their selected historical period.”[3]

One should add that not only does the marginal UNIT change, but so does that unit’s operating characteristics (i.e., ramping heat rate) and the need to match actual wind speed data and (via performance of its turbines) wind output.[4]

Given the inherent complexity, it is problematic to speculate about how wind volatility either lowers price or improves reliability on the spot market, as AWEA stoutly affirms that it does. Regional transmission operators are obliged to obtain the lowest cost set of suppliers to achieve high reliability, often deploying “redispatch” rebundling of the power mix to solve impromptu predicaments.

Consequently, spot market prices are contingent on many conditions within a series of priorities, some of them temporal, some functional, some related to scheduling. For most regions, about 90% of the spot market supply is purchased in a day-ahead auction in which wind rarely participates since it cannot assure firm delivery 24 hours in advance (and would be liable for financial penalties). Instead, it usually participates in the real-time, at-the-moment market, which historically accounts for only 10% of the overall spot market. In this situation, if wind can deliver, conventional generators may back down and still receive the agreed marginal price set from the day before while saving fuel—a good deal for particularly natural gas generators in many areas of the country.

However, in areas like Texas, where there is no day-ahead spot market, wind is responsible for eroding natural gas prices, as the Wall Street Journal reported last March. Suffice it to say, as Lisa Linowes once did:

“Since the price paid for 90% of the generation is established twenty-four hours in advance of the power day, any low-cost participation from wind will have only a marginal impact on prices limited to those resources operating within the real-time market.”[5]

Government projections, particularly those from the National Renewable Energy Lab, that show wind can provide a substantial percentage of electricity in the United States while substantially reducing CO₂ emissions are uncontaminated by reality; they have no more credibility than college football polls. Simulations based upon even hourly dispatch models without considering the gustiness of the wind and the corresponding heat rate penalties yield incomplete, if not duplicitous, information about a complex process—while assumptions about wind’s ability to replace generation one-to-one are cartoonish misrepresentations of reality.

The NREL projections do not even try to account for the impact of thermal cycling events in response to wind volatility. Politically correct but untested testimonials from independent grid operators are equally problematic.

Measurement of greenhouse gas emissions is imprecise and statistical. Power plants are apparently not equipped with monitoring sensors; consequently, emission data is not based on direct observation. Rather, it is derived by plugging in numbers according to a formula, factoring information about fuel type and operating hours, estimating a plant’s thermal efficiency, and then leavening all that with a coefficient that calculates the pounds of CO₂ produced by particular fossil fuels.

It is unlikely that these averages are computed at time frames less than a day, which greatly disguises the effects of minute-to-minute wind flux. In short, reported numbers are typically formed from indirect model calculations, which themselves are fraught with a series of estimates.

Any statistician familiar with the problem of “averages” knows the difficulty of using them to explain complex phenomena. Wind behavior is different than the rather straight on performance of conventional generation. As stated earlier, trying to describe wind activity with snapshots at any given time masks its volatility, making it seem steady and sober, deceptively giving the impression that the energy yield from wind is the same as that from conventional sources.

For the purpose of more accurately accounting for the way wind volatility distorts the general formula in use for calculating emissions production, given the present limitations for direct measurement, load dispatch analyses at, say, 15-minute intervals, should be the preferred modeling tool, italicized here to emphasize that models are merely a means of examining reality, not reality itself. They would allow a much better look at the way routine wind flux affects the overall thermal activity within the grid.

WHAT THE USEIA DATA REALLY SHOW

No one with knowledge about how CO₂ emission data is estimated should say they represent objective reality, as AWEA does, for the possibility of plus or minus error is non trivial. With this in mind, let’s look more closely at what the EIA has actually said about wind and carbon emissions, in context. Here’s what Robert Bryce had reported in his Wall Street Journal article: “The U.S. Energy Information Administration (EIA) has estimated the potential savings from a nationwide 25% renewable electricity standard…. Best-case scenario: about 306 million tons less CO₂ by 2030. Given that the agency expects annual U.S. carbon emissions to be about 6.2 billion tons in 2030, that expected reduction will only equal about 4.9% of emissions nationwide.” There is a worst-case scenario: all that wind will produce virtually no reductions, a conclusion of the National Academy of Science.[6]

Bryce also reported that the NREL believes that if 20% of the electricity in the eastern U.S. came from wind, “the likely reduction in carbon emissions would be less than 200 million tons per year,” not even a drop in the bucket, as we will see.

Here’s what the EIA national generation mix data for 2007 and 2008 reveals:

• US electricity demand in 2008 fell 0.9% from the previous year. Peak summer demand fell 3.8%. Coal generation declined 1.5%; natural gas, 1.5%; nuclear, 0.3%. CO₂ emissions fell 2.5%–”largely due to decreased fuels consumption,” explained the USEIA commentary.
• During this period, wind generation increased 60.7 percent, from 34.5 million MWh in 2007 to 55.4 million MWh in 2008.
• The overall improvement in the average natural gas capacity factor since 2003 reflects both the increased reliance on combined cycle generation to meet energy requirements and further efficiency gains in combined cycle generation technology, leading to lower CO₂ emissions.
• Sulfur dioxide (SO2) emissions fell 13.4 percent, from 9.0 to 7.8 million metric tons, between 2007 and 2008. This amounts to the largest year-over-year decline since 1995, almost entirely due to the improvement in natural gas plant efficiency. The large reductions in SO₂ in 2008 resulted in part from a decline in fuel consumption but mostly from the installation of emissions reduction equipment in response to the Environmental Protection Agency’s Clean Air Interstate Rule.
• “Estimated carbon dioxide emissions by U.S. electric generators and combined heat and power facilities fell 2.5 percent from 2007 to 2008 (from 2,540 million metric tons to 2,477 million metric tons), largely due to a fall in fuel consumption at electric power plants.” (Italics added)

The substantial increase in installed wind clearly had little to do with reductions in CO₂ and other greenhouse gasses. Rather, according to the USEIA, they were almost entirely due to reductions in demand, with corresponding reductions in generation. There were additional reductions of CO₂ emissions attributed to increased use of more efficient CCGT units. Significant CO₂ reductions at a national level in 2008 cannot be tied to wind, even indirectly. And, most likely, no CO₂ reductions can be ineluctably credited to wind activity.

According to the EIA, the total U.S. electricity-related emissions of greenhouse gases in 2008 were 2,499.8 mmt of carbon dioxide equivalent (CO₂e), or about 35% of total US greenhouse gas emissions. In 2009, it experienced a decline of 205 mmt, the largest in recent times. Moreover, this 4% drop in the carbon intensity of the electric power sector, was

primarily due to fuel switching as the price of coal rose 6.8 percent from 2008 to 2009 while the comparable price of natural gas fell 48 percent on a per Btu basis. The carbon content of natural gas is about 45 percent lower than the carbon content of coal and modern natural gas generation plants that can compete to supply base load electricity often use significantly less energy input to produce a kilowatt-hour of electricity than a typical coal-fired generation plant. For both of these reasons, increased use of natural gas in place of coal caused the sector’s carbon intensity to decrease. (bold added)

In discussing 2009 CO₂ reductions, the EIA does state wind was responsible for avoiding 39 mmt. This was 19% of the total claimed CO₂ emissions drop for the year—205 mmt— which also factored reduced demand and improved nuclear (26 mmt) and natural gas (82mmt) efficiency. However, since the total CO₂ emissions tied to electricity production for the year was 2295 mmt, the 39 mmt from wind contributed only 0.016% of the total—a thimbleful, despite the presence of over 35000MW of installed wind capacity. And even this may have substantially overstated the case for wind, given the margin for error inherent in the EIA’s emission savings projection from wind.

——————————————————————————————————-

The following provides links to the other posts in this series as they are published:

Part I – Windpower on the Firing Line

Part II – Getting to the Facts on Emissions Reductions

Part III – (This post)

Part IV – Where’s the Empirical Proof?

ENDNOTES

[1] When coal-fired turbines are frequently and rapidly ramped up and down to compensate for wind variation, “the unit emission of CO2 per kWh increases …to cope with load. This can easily be 2% or more…depending on the degree of r1amp-down. On a coal-fired boiler, a 2% reduction in efficiency increases the unit emissions from 950 grams per kWh to nearly 1,100 grams per kWh, a change of 150 grams per kWh….”—a 16% increase in emissions.” David White, Reduction in Carbon Dioxide Emissions: Estimating the Potential Contribution from Wind Power, December 2004, page 16, Renewable Energy Foundation http://www.ref.org.uk/Files/david.white.wind.co2.saving.12.04.pdf

[2] William Tucker, Obama’s Nuclear Power Breakthrough, The Wall Street Journal, February 26, 2010: http://online.wsj.com/article/SB10001424052748703787304575075413484405770.html

[3] Tom Hewson, “Calculating Wind Power’s Environmental Benefits.”Power Engineering. July 2009: http://www.evainc.com/Publications/windpowerbenefit.pdf

[4] Tom Tanton, personal email dated August 21, 2010, and, personal email, dated August 27, 2010.

[5] See Russell Gold, Natural Gas Tilts at Windmills in Power Feud, The Wall Street Journal, March 2, 2010. See also John Chandley, How RTOs Establish Spot Market Prices (and How This Helps to Keep the Lights On), PJM Interconnection, September 27, 2007: http://www.pjm.com/~/media/documents/reports/spot-market-prices-j-chandley.ashx. See also Ross Baldick, Single Clearing Price in Electricity Markets, University of Texas at Austin, February 18, 2009: http://works.bepress.com/cgi/viewcontent.cgi?article=1156&context=cramton.. Quote taken from Lisa Linowes’ essay, WindAction, March, 2010: http://www.windaction.org/faqs/26050. Special thanks to Tom Stacy for providing the Chandley article.

[6] The NAS worst-case scenario—1.2% reductions. “Wind power will offset emissions of carbon dioxide by 1.2-4.5% from the levels of emissions that would otherwise occur from electricity generation.”

FACTS ARE STUBBORN, BUT STATISTICS ARE MORE PLIABLE

—Mark Twain

This section reviews the criticism AWEA makes about the Bentek report and the evidence the organization offers purporting to prove how wind reduced substantial greenhouse gas emissions in Texas and Colorado. The section concludes with an examination of what the EIA data really show for those states for 2007 versus 2008—and what the official Energy Information Administration (EIA) reports say about causal factors for any CO₂ reductions.

The Bentek study showed that wind volatility in the sampled regions of Colorado and Texas caused more CO₂ emissions than would have been the case with less wind and more efficient coal plants. Using mostly sub-hourly performance data, Bentek was able to “examine in detail how coal, gas and wind interact and the resulting emissions implications.”

In general, the research team found that wind, typically much more active at night when demand is least, was more entangled with base load coal plants given that more flexible and costly gas plants were dispatched to meet higher daytime demand.

As Robert Bryce reported in his influential Wall Street Journal article, the repeated cycling—ramping up and back—of coal plants, with their higher CO₂ concentrations, created heat rate penalties that produced a greater volume of CO₂ emissions. The coal plants in a wind balancing role were operating more inefficiently, and thus required more fuel, much in the way an automobile does when driven in stop-and-go traffic.

As noted in Part I of this series, Bentek then recommended that better results for carbon emissions offsets could be produced by introducing more responsive natural gas units on the system, in part replacing the coal plants with machines that burned 50% cleaner.

AWEA’s Surface Criticism

AWEA maintains this study must have been seriously flawed, since, as more wind was installed on the systems, EIA data showed that CO₂ and other greenhouse gas emissions declined between 2007 and 2008, and, within both states, coal and natural gas consumption fell as well. Goggin then quotes Frank Prager, who “pointed out the flaws … in the (Bentek) study and reconfirmed that wind … significantly reduced fossil fuel use and emissions….” But as vice president of environmental policy for the energy company, Prager is not a disinterested party. But it’s the evidence that’s important, not his testimonial.

Let’s look at the evidence more closely. The statistics that AWEA presents are accurate—as far they go. But there is more to the story. The wind trade association neglected to mention that both states’ increased their net imports of out-of-state electricity capacity by an amount that exceeded the reductions in in-state fossil fuel use.

Figure 1 illustrates what AWEA claims to be the case:

Figure 1 – Isolating Changes in Fossil Fuel and Wind Electricity Production in Colorado for 2008

Source: DOE EIA[1]

Power Imports: The Missing Piece

However, to get a broader picture, it is necessary to look to other DOE data, which includes interstate traffic in electricity. In 2008, Colorado had net imports of 3,604,000 MWh of electricity, and Figure 2 adds this to the Figure 1 representation.

Figure 2 – Isolating Changes in Fossil Fuel and Wind Electricity Production and Net Imports in Colorado for 2008 Source: DOE EIA[2]

Consequently, there is another more plausible explanation for the reduction in fossil fuel use and greenhouse gas emissions in Colorado: increased net imports that was CO2-free for the state. Moreover, the imported electricity was most likely firm capacity from fossil fuel, nuclear or hydro plants. If so, this completely circumvents the entire problem caused by increased wind volatility, which is a greater issue than steady operation at lower utilization. As an official from the Ontario IESO once said, “It is better to have a reduced capability that is available when needed than a greater capability that is only available when it is not needed.”

The import/export of firm capacity makes sense. But the import/export of wind makes sense only in the world of government-mandated good intentions—gone awry, essentially paying others to spread the dysfunction around while jamming up transmission lines with low quality power.

If anything, accounting for imports confirms the Bentek findings, reinforcing the view that increasing wind volatility imposes thermal inefficiencies throughout the system, ultimately saving no conventional fuels and, in the case Bentek studied, increasing CO₂ emissions. AWEA, in short, has confused correlation with causation. Simply because there was a decrease in in-state fossil fuel use does not mean increased wind generation was responsible. As Noble laureate Richard Feynman once said about scientific integrity:

if you’re doing an experiment, you should report everything that you think might make it invalid–not only what you think is right about it: other causes that could possibly explain your results; and things you thought of that you’ve eliminated by some other experiment, and how they worked–to make sure the other fellow can tell they have been eliminated.[3]

Turning to Texas The same situation occurred in the Texas study area. Increased net imports from other states also more than compensated for reductions over this time period in in-state fossil fuel use. Moreover, USEIA state-by-state data show that, from 2005 through 2007, CO₂ emissions in Colorado had increased steadily, despite increasing numbers of wind projects. For Colorado, CO₂ emissions were 41.2 million metric tons in 2005; by 2008, there were 41.5 million metric tons, down slightly from 2007 levels of 43.4.

In Texas, the situation over the entire decade shows ups and downs along a fairly steady state, varying only by 9%. In 2000, emissions were 264.4 million metric tons—a decade high. By 2005, emissions were 260.7; by 2008, they had declined to 252.1, down from the previous year’s total of 257.1, for reasons, as in Colorado, that can be accounted for by an increase in net imports, among other reasons. (For those interested in whether or not wind reduces Danish CO₂, check out increased imports of hydro [not just exported wind to Scandinavia] and the higher efficiency of newly installed CHP plants.)

A review of the history of changes in fossil fuel generated electricity and net imports provides further support for the thesis that imports are the source of reduced fossil fuel plant use. Since 2000, and before the introduction of much wind activity, there are years that show similar change patterns. One year shows substantial growth in in-state generation and much reduced imports, and other years show small amounts of change in in-state generation and imports, representing a more-or-less steady-state condition. Further motivation for changes on a year-to-year basis may reflect wholesale pricing conditions at the time.

Nationally, grid managers at the beginning of the decade anticipated demand increases of more than 2% annually, and called for new power plants to meet it. When demand actually decreased because of the economic crash in 2007, any new plant that came on line in that year, replacing an older unit that was to be retired in 2008, could have been responsible for an increase in megawatts for 2007—and then a sudden reduction in 2008. Alternatively, some of these plants now supply more than is needed because of reduced demand, and are dispatched less often than originally intended.

Despite the plausibility of the net import case for the small reductions in fossil fuel use and greenhouse gas emissions in 2008, much uncertainty nonetheless remains about what is actually happening. The variables involved are highly complex and one should examine them both individually and as they interact. Although, because so many things are possible, it is possible that wind may have played a role, that idea must compete with more probable events.

Figure 3 rather dramatically illustrates there is more at play than changes in fossil fuel production affecting CO₂ emissions levels, since the two phenomena don’t appear well correlated.

Figure 3 – Annual Changes in Fossil Fuel Plant Production and CO₂ Emissions for Texas Source: DOE EIA[4] Conclusion

AWEA’s contention that there exists “overwhelming evidence,” “indisputable data,” and “uncontestable benefits” to support its belief that wind is a potent offsetter of emissions is, at best, disingenuous and probably spurious. It is definitely not derived from scientifically vetted evidence. Whatever claims are made for wind should not ignore a grid’s requirement for capacity, in most cases in the form of highly inefficient fossil-fuel plant operation used to balance unreliable and erratic wind production.

This is particularly true in any discussion about AWEA’s claim that wind has “nearly zero marginal operating costs” compared to conventional generation. It should be. Considering that its capital plant cost is almost wholly subsidized by public dollars (note the other elephant in Bryce’s article was the high per energy unit subsidy for wind), one should wonder why wind charges a dime for its product (on some grids, it must). Even so, comparing the costs of capacity-less wind to the costs—at any level of consideration—of firm capacity plants seems incredibly naive.

It is only appropriate that a third-string college-league first baseman, who made the team because his father contributed to the alumni fund, costs less than the major league’s Babe Ruth. And let’s agree that the nearly zero operating cost of a soapbox derby vehicle, which at least has some manageable capacity, is incomparably less than that of a Boeing 747. —————————————————————————————– The following provides links to the other posts in this series as they are published:

Part I – Windpower on the Firing Line

Part II – (This post)

Part III – Further Analyses

Part IV – Where’s the Empirical Proof?

ENDNOTES

[1] U.S. Energy Information Administration. Independent Statistics and Analysis, Colorado Electricity Profile (2008 edition), table 5. http://www.eia.doe.gov/cneaf/electricity/st_profiles/colorado.html [2] U.S. Energy Information Administration. Independent Statistics and Analysis, Colorado Electricity Profile (2008 edition), tables 5 and 10. http://www.eia.doe.gov/cneaf/electricity/st_profiles/colorado.html [3] http://www.lhup.edu/~DSIMANEK/cargocul.htm. Adapted from his commencement address at Caltech in 1974 [4] U.S. Energy Information Administration. Independent Statistics and Analysis, Texas Electricity Profile (2008 edition), tables 5 and 7. http://www.eia.doe.gov/cneaf/electricity/st_profiles/texas.html