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There has been much debate recently about subsidy in the energy industry and for wind energy in particular.  According to the EIA, in 2007, wind energy received $724 million in federal support.  That’s a lot right?  Well, that same year fossil fuels received $3.2 billion in subsidy.

These figures only take into account the direct subsidies. We often overlook the hidden costs, sometimes called “externalities” related to energy generation.  To get a full accounting of how much the taxpayer subsidizes energy we have to look at these externalities, and chief among them are damage to human health and damage to the environment.

Burning fossil fuels releases many dangerous compounds that cause lung damage, asthma and premature deaths from air pollution, birth defects from mercury fallout, and damage to buildings, timber harvests and ecosystems from acid rain.  The National Academy of Sciences, in a report requested by Congress, calculated these damages at $120 billion a year in the United States.  These costs are very real and they are not reflected, or “internalized” in market prices.  In effect, they are a hidden subsidy for polluting energy sources.

Coal plants are the biggest source of such external, or “hidden” costs, with domestic non-climate damages alone averaging $62 billion annually, equivalent to 3.2 cents per kWh.  Climate-related damages from coal power plants are estimated to range from 0.1 cents to 10 cents per kWh. The cost for cleaning up after coal then ranges from 3.3 cents to 13.2 cents per kWh produced.  This is in addition to the billions of dollars in direct subsidies.

In comparison, wind energy is clean.  There are no hidden costs—a wind turbine produces no harmful chemicals so there’s no disease or birth defects, no damage to our environment.  Like the rest of our electricity sources, it gets a subsidy, to the tune of 2.3 cents per kWh.  But that’s a real bargain compared to coal.  Between the subsidies and the health and environmental damage, coal costs 3.5-13.4 cents per kWh.  That means the direct and indirect subsidies for coal are at least 50% more, and perhaps 5 times more, for coal derived electricity.

Sources:
National Academy of Science: Report Examines Hidden Costs of Energy Production and Use

U.S. Energy Information Administration: How much does the Federal Government spend on energy-specific subsidies and support?

The wind industry is a whole lot more than meets the eye. Behind those turbine towers serenely dotting the skyline is the bustle of manufacturing, construction, and maintenance work which goes into building and operating them. Throughout the Great Plains’ wind corridor, these jobs are helping revitalize small towns that have been hurt economically by the migration of traditional kinds of manufacturing overseas.  Nowhere is this process more noticeably transformative than in the state of Iowa, where the manufacturing of turbines and nacelles (the box on the turbine which contains the generator), account for 2,300 jobs.

Iowa has a rich history of manufacturing in areas that you might expect for such an agricultural powerhouse—its specialties  included farm equipment and food processing machinery. It also had plants devoted to products such as printing presses and coal trucks. This history meant that even though the state had to endure manufacturing slowdowns and concurrent job losses over the past 30 years, it always possessed human capital with knowledge of how to build things.  Components of wind turbines, such as blades which can weigh up to 15,000 lbs, fit into the same class of heavy machinery as much farm equipment. Thus, Iowa was in a great position to supply its wind industry with parts as homegrown as its corn.

Many wind manufacturing companies have chosen to locate in Iowa, including industry giants such as Germany’s Siemens and Spains’ Acciona.  This makes sense given the state’s abundant wind resources and reputation for being on the progressive edge of wind development. Iowa is known for passing one of the country’s first Renewable Energy Standards back in the day when this type of legislation wasn’t yet the norm. The state also offers tax incentives for wind companies who build plants there. All of this has resulted in small town success stories such as those profiled here and here.

The growth of wind manufacturing in Iowa makes it an interesting model for the wind industry as a whole. For one thing, it proves that wind has grown out of any possible classification as a “niche” industry. It powers job growth not just in manufacturing but also in the technical field (installing turbines) and the development field (planning wind farms). Although each field is highly specialized, Iowa shows that when brought together, these jobs can provide a dynamic boost across the whole economy.

Finally, Iowa’s prowess in all things wind is leading to some unforeseen benefits. First, the state has become a leader in wind research and education. Programs at the state’s colleges which train students to become wind technicians consistently find employers swooping in to hire students before they even graduate, and Iowa State recently established a Wind Energy Manufacturing Laboratory to focus on improving productivity and reducing costs at turbine factories. Also, another sign that Iowa’s proactive stance on renewable energy is paying off came July 20th when Google inked a 20-year contract to purchase 114MW of power from a wind farm in Story County.

All of this shows that wind energy’s benefits are constituted not just in the electricity it produces but also in the activity behind the scenes. Iowa (which produces a higher percentage of its energy from wind than any other state) is a great example of wind having a far-reaching positive impact on a region.

China Wind Farm

Photo by: Mike Locke

The United States wind industry gained a new competitor as China surpasses Germany last year to reach the world’s #2 spot for total installed capacity.  Currently, the US sits in a comfortable lead with 35,159 MW of total installed capacity;but with China’s exponential installation growth, our hold may not be very strong.  According to the Global Wind Energy Council (GWEC), in 2004, there were only 764 MW of wind capacity installed in China.  That number has been doubling almost every year, reaching 25,805 MW by the end of 2009.

Goals for wind turbine installations have been growing as well.  In 2007, China announced a national target of 5,000 MW installed by 2010.  Only a year later, that number increased to 10,000 MW.  After a whopping 13,785 MW growth in 2009, China set a new target of 35,000 MW installed by 2011, and 150,000 MW installed by 2020—a fivefold jump from the original 30,000 MW goal in 2007 and 50,000 MW more ambitious than the US goal of 100,000 MW installed by 2020.

The push behind China’s renewable energy boom lies in their National Renewable Energy Legislation.  First effective in 2006, the legislation states a national preference for the development and utilization of alternative energy resources.  This meant setting a national commitment of 15% renewable energy use by 2020 and providing increased government funding for green energy research and projects.  The legislation also requires power grid operators to purchase all energy generated from renewable sources, with a penalty for those who do not abide.

wind turbine production

Engineers work on a wind turbine part.

Despite our difference in governing styles, the United States could stand to learn a thing or two from China’s National REL—especially in the economic success it has created.  According to the Chinese Renewable Energy Industries Association (CREIA), renewable energy accounted for 1.12 million jobs in 2008 and is climbing by 100,000 each year.  The majority of these jobs come from manufacturing companies.  China is currently the leading producer of wind turbines and solar panels.  In the wind industry, that success was facilitated by the adoption of the “70% domestic” rule in 2004 which states that all turbines in Chinese wind farms must have at least 70% of its parts made in Chinese factories.  The impact was phenomenal.  The Chinese turbine production industry has grown from only six manufacturers in 2004 to nearly 90 at the end of 2009.  The government recently abolished this requirement to allow for more participation in the international market.  According to GWEC, only 17 Chinese-made wind turbines were exported in 2009.

The American market has the potential to grow at such an electrifying pace as well if we adopt a National RES.  The “Job Impacts of a National Renewable Energy Standard” study, conducted in 2009 and published by the RES Alliance for Jobs, found that a 25% by 2025 national standard would support an additional 274,000 jobs than an industry without a public policy.  The American Solar Energy Society’s (ASES) Green Jobs Report also forecasts more favorable outcomes for implementing an RES.  In the “business as usual” scenario, which means no changes in policy or major initiatives, the report only predicts a 130% increase in revenue and a 160% increase in jobs created in the next two decades.  The alternative scenario, which calls for a sustained public policy commitment, predicts a potential revenue growth of 1,200% and a 1,300% increase in jobs in the next two decades.  These are astounding differences for the adoption of one piece of legislation.

Figure 1

Change in Renewable Electricity Supported Jobs in 2025 With a 25% RES by 2025.

Every other summer, my parents and I take a trip back to China to visit our family.  I will never forget how my homeland greets me as I step onto its streets.  Outside, the sun burns earnestly on a cloudless horizon.  Its light is obscured by a permanent layer of smog, causing the sky to remain a dusty gray-blue hue and trapping in the oppressive heat.  Take a breath, and the summer’s fever invades the lungs, infecting the veins within milliseconds.  “Sauna days,” my uncle chuckles as he lifts my last suitcase into the car, “do you miss them?”

I don’t.  I really don’t.  Sauna days are the worst part of my Eastern adventures.  Hopefully, these muggy summers become more bearable with the help of a strong national commitment to greener energy, making my future vacations a lot more enjoyable.  As for the rest of the seasons I spend in the good old US of A, here’s hoping we are headed in the same direction.

Much to our excitement, wind energy continues to grow as a way of meeting U.S. demand for electricity, now accounting for about 40% of the new yearly additions to the country’s electrical capacity. However, as the industry continues to grow, one of the challenges it continually faces is transmitting electricity from rural wind farms to the urban areas that need it.  To put this issue into perspective, the US transmission system is like a highway system with many local roads but few interstates; a fine system on a local level but not as good over long distances. To overcome this barrier, the federal government and the American Wind Energy Association are advocating for the creation of an intrastate electrical superhighway that would connect the country with a spider web of high-voltage transmission lines. The only question is deciding who pays for it — an especially tricky question since long-distance power lines would benefit many people over a large geographic area. The oil- and coal-based power plants that have the lions’ share of US energy production don’t have this problem: luckily for them, they can be built near cities, limiting the need for long-distance transmission.

Luckily, solutions have begun to arrive from the grassroots level. A recent breakthrough was made by the Southwest Power Pool (SPP), a regional association of power companies which helps manage the transmission grid in the American Southwest. Several weeks ago, the Federal Energy Regulatory Commission (FERC) approved their new cost allocation plan which creates a “highway/byway” system of paying for transmission. Basically, the cost to build power lines that carry large amounts of power (300+kV) are distributed among many utilities in the region because the lines will serve wide areas. Smaller transmission lines (less than 100kV) are paid for entirely by local utilities since they are intended mostly for local use. For lines of intermediate size (100-300kV), local utilities pay much of the cost but other utilities around the region chip in too. FERC’s acceptance of this plan clears the way for SPP and other utilities to start building longer transmission lines, especially in the wind-rich Heartland, which is SPP’s primary area of service.

This newly approved highway/byway system will allow transmission lines to be built between Wichita, KS, Spearhead, KS, and Hitchland, TX. Once completed, these lines will span much of southern Kansas and the Oklahoma Panhandle, one of the most wind-abundant regions in the country. The construction of these power lines will likely be a huge boost to area wind projects whose electricity will now become accessible to new population centers.

New interstate transmission lines on a national scale would help consumers save billions of dollars. For instance, according to one study done by the Electric Reliability Council of Texas (ERCOT), a $4.9 billion dollar investment in new transmission would pay for itself in less than three years and save ratepayers about $1.7 billion per year for each year after that. Not bad. Further investment in transmission would also act as a huge incentive for the wind industry to expand into more wind-rich locations, bringing all the benefits of new jobs, local income, reduced emissions, and fewer “natural” catastrophes (ie, oil spills) with it.

Federal efforts to plan new interstate transmission lines have been repeatedly thwarted in the past by one question: who pays for the updates? SPP’s cost allocation plan could be the revelation that finally marks the genesis of a nation-wide interstate transmission overhaul. What we need now is for more regional transmission operators to adopt “highway/byway” plans similar to SPP’s. The adoption of such policies would be a good first step toward a much-needed update to our national grid.

AWEA’s Into the Wind blog links to a story from Fox Toledo about how the residents of Fowler, Indiana have reacted to a nearby wind farm:

And when it comes to noise, nobody seems to take issue.

“I don’t hear them at all,” said Charlene Deckard.

“In the house I hear nothing,” Elmira Deckard said.

And from Don Clute: “If a train goes by a mile away it makes more noise than I’ve ever heard from a wind tower.”

The residents of Fowler appear to feel overwhelmingly positive about the turbines—one resident, Charlene Deckard, even calls them attractive—and the economic benefit that they provide.

If nothing else, this only goes to show that there’s nothing like spending time near a turbine to make one realize that noise isn’t much of an issue at all.

[note: this OpEd was sent out to and picked up by news organizations last week]

Today’s farmers are interested in wind energy because they’re good managers; farming is all about maximizing profits and reducing risk. Wind energy does both. It’s an additional, steady source of income that doesn’t require extra work, a second crop that can be harvested without effort or significant use of land.

Some people might believe because wind turbines are such large structures that they take substantial acres of property out of production. This is a common misconception. In reality, wind turbines occupy a small area, leaving 99% of farmland in production.

A rule of thumb regarding wind farm land use is that, while each turbine generally needs a plot of about 100 acres separating it from other turbines, the actual footprint of each turbine is less than one acre. This footprint includes the area surrounding the turbine and all access roads. Therefore, each turbine occupies less than 1% of the open land required by a wind farm, leaving the other 99% of the property available as farmland or pasture.

To examine the impact wind energy can make on a small amount of land, let’s envision a hypothetical farmer, John, who grows corn on 500 acres of land. According to the 2008 Riverland Community College Farm Business Management Annual Report for Southeast Minnesota, the average return per acre of corn from 1999-2008 was $60.13 per acre. A total of 500 acres of corn at $60.13 profit equals $30,065 per year. This is the farmer’s return on labor and management after investing capital, labor, management and taking commodity and weather risks.

Now, imagine that John has five turbines on his farm, occupying five of his cropping acres, leaving him with 495 acres of corn. His farming conditions are the same, so from those acres he’ll make $29,764 in profit, based on the 10 year average profit of $60.13 per acre. But add in the revenue from the turbines—$35,000 total assuming $7,000 per turbine (on the low end of what National Wind pays)—and his total profits increase to $64,764 per year. This would be almost double his profits from growing only corn without turbines. Under National Wind’s community model, the profit structure may be even better if landowners take an ownership stake in a project company and share in the actual profits generated.

What if there is heavy flooding or drought next summer, and John is only able to harvest a fraction of expected yield? His revenue could drop to a level below his expenses. Maybe he would break even with the help of crop insurance, but he won’t see a cent of profit. If he had turbines on his property, he would still earn $35,000 in profits. Turbine revenues help to buffer against these acts of God and resulting price volatilities. This allows the farmer to diversify his income and reduce risk.

Wind is another crop that more and more farmers are harvesting. With a small initial outlay of land, a turbine can continue to provide income for years into the future. After construction is complete, the practice of farming continues as it has for generations, with the bonus of added financial security.

Patrick Pelstring is the Co-Founder and Co-Chair of National Wind.

AWEA’s Into the Wind blog recently linked a South Dakota Public Radio story about the town of Howard, SD. After 90 years of declining population, the town has grown in recent years thanks in part to a turbine blade manufacturing plant. This is a great example of the positive effect that green energy infrastructure can have on a local community.

Howard is banking on green jobs and green energy, and it’s working. More than 230 new jobs have come to Howard this decade. The climate legislation in congress could create even more green jobs in places like Howard. It’s good news for Randy Parry.

[…] Parry calls South Dakota the Saudi Arabia of wind. He says the state is ripe for a boom in wind energy, but he says it all hinges on the creation of new transmission lines needed to get the power to market. Parry hopes congress will help fund this new electric grid in this upcoming climate bill.

National Wind has written extensively in the past about the need for both an upgraded electric transmission grid and a comprehensive bill to combat global climate change.

Listen to the story here:

To read the story in its entirety, visit South Dakota Public Broadcasting’s website.

The American Wind Energy Association recently blogged to set the record straight regarding wind energy’s alleged high cost compared to nuclear power. AWEA responded to a post on the Wall Street Journal’s Environmental Capital energy blog, Going Nuclear: GOP Energy Plan Draws Heavy Flak, which discussed the merits of the Republicans’ proposed energy plan that calls for the construction of 100 new nuclear power plants. The WSJ blog post argued that costs related to wind power were considerably higher than those associated with nuclear power. AWEA countered, writing

Last year, wind proved its mettle as an affordable means of adding clean, reliable electricity to the grid, accounting for 42% of ALL new generation added in the U.S. Wind’s relatively short construction time (months rather than years) and modularity (it can be built incrementally) improves affordability even more since wind projects do not tie up capital for years. In contrast, we haven’t seen a new nuclear facility built in nearly a generation.

 

Climate Progress, an organization that offers a progressive perspective on climate policy, researched the cost of nuclear energy and concluded that nuclear power is too expensive to be a legitimate source of energy. Referring to a Keystone Center study partially funded by the nuclear industry, Climate Progress reported that “estimated capital costs for nuclear [are] $3600 to $4000/kW including interest.” On average, wind farms cost $2300/kW, making wind projects substantially cheaper than nuclear plants. This price will drop further as turbine manufacturers improve efficiency through mass production.

Neither the WSJ’s numbers nor the estimates provided by Climate Progress account for the cost of disposing of the nuclear waste created by atomic energy. Before the Obama administration scrapped plans for building the Yucca Mountain nuclear waste repository, cost estimates had reached more than $92 billion over the 150-year lifetime of the storage facility, unadjusted for future inflation. The White House has not yet announced a new strategy for disposing of nuclear waste. Wind energy, of course, does not require the disposal of hazardous waste that will remain radioactive for thousands of years.

Furthermore, nuclear power plants do not benefit surrounding communities the way that National Wind’s community-based wind projects do. National Wind’s model offers landowners a financial stake in the project and involves them every step of the way in the decision making and planning process.

With concurrent increases in energy prices, concern about climate change, and growth of the wind industry, some homeowners are becoming alarmed by a rumor that wind turbines decrease property value. However, in reality there is no connection between wind turbines and declining property values. In 2003, the Renewable Energy Policy Project (REPP) released a widespread investigative report after completing a research study entitled, “The Effect of Wind Development on Local Property Values”. Intended to uncover the validity of the property value reduction tale, the document revealed that “the presence of commercial-scale wind farms do not appear to harm ‘view shed’ property values.” The study looked at 25,000 homes across the United States that were located in the area known as the ‘view shed’ of a wind farm – the area within a 5 mile radius of a wind farm. The wind farms selected were greater than 10 MW in generating capacity.

The study found that, like many other human-made structures that are visible in the immediate and distant horizon, including buildings, grain elevators, water towers, silos, telephone poles, utility poles, transmission line towers, advertisement bill boards, and communication and cell phone towers, wind turbines do not have a negative effect on property value. Quite on the contrary, the study discovered that, in many cases, the property value actually increased in the presence of a wind farm. In fact, the study states that, “for the great majority of the projects, the property values actually rose more quickly in the view shed than they did in the comparable community. Moreover, values increased faster in the view shed after the projects came online than they did before.” Although this cannot comprehensively be contributed to the wind farms, this trend is a fascinating possibility to consider.

Multiple other research studies echo these same results. For example, a new report that studies wind farms across two states, spanning from 1998 through 2006, shows that wind energy facilities do not harm property values. In fact, some new-home buyers are embracing the benefits of such ‘green energy’ growth in their areas. Conducted by Peter J. Poletti, Ph.D., MAI, President of Poletti and Associates, and an Illinois Certified General Real Estate Appraiser, the study compared property sales in the target areas with non-wind farm areas with similar characteristics.

In another study completed several years ago, Ben Hoen, a Bard Center on Environmental Policy graduate student, looked at actual home sales near a 30-megawatt wind project with 20 installed wind turbines in central New York State. Over a decade, he examined 679 home sales occurring within 5 miles of the project. He found no evidence to support a drop in property values. To greatly expand the sample, Hoen teamed up with Ryan Wiser, a scientist with the Electricity Markets and Policy Group at the Lawrence Berkeley National Laboratory to continue the study. Together, they began research on the first methodical, juried and, eventually, published study on the documented effects of wind turbines on property values. Their preliminary results, as predicted, did not indicate a drop in property values due to wind farm installations. The finished study examined 3,500 to 5,000 home sales near 8 to 10 operating wind turbine projects.

In a presentation of preliminary findings from four sites with a total sample size of 2,195 home sales, the team stated that they had found “no statistical evidence to support that property sales within 4 to 7 miles of a wind facility were adversely affected.”

No statistically significant data indicate that there should be a concern about loss of property value in the view shed of wind farms. Neighbors of wind farms, along with the rest of America, stand to benefit from wind energy developments as they help us stimulate the economy through the creation of green jobs and concomitantly mitigate climate change by increasing our use of our abundant clean energy resources.

According to a recent survey from the Saint Consulting Group the number of Americans who support wind energy is on the rise. A full 82% of Americans surveyed this year said that they would favor wind energy developments in their hometown. This percentage is up from 76% last year. The greatest acclaim for wind power comes from the Midwest, where a massive 86% of respondents said that they would be supportive of wind development in their communities.

Why might the number be on the rise? One likely explanation is that all the recent press on energy issues has brought a heightened sense of awareness of how the American economy benefits when power is generated locally. According to the Saint Consulting Group, support for all kinds of local power generation is increasing, suggesting that Americans are becoming progressively more in favor of improving America’s energy independence and energy security.

Another likely reason for the augmented support for wind energy is that people are becoming more aware of the potential human and environmental consequences of global climate change. Research conducted at the end of 2008 by the Yale Project on Climate Change and the George Mason University Center for Climate Change Communication showed that 72 percent of Americans felt that global warming was personally important to them. Furthermore, an impressive 90 percent of Americans said that they would be willing to undergo economic losses if the United States were willing to act to reduce climate change. For instance, 72 percent of respondents said that they would support an initiative to increase the average annual household electric bill by 100 dollars if it meant that 20% of their electricity would come from renewable sources.

These figures are particularly significant when compared to a 2007 Gallup Poll that showed that only 60% of Americans believed that global warming was starting to occur. People are increasingly realizing how wind power can contribute much needed rejuvenation to the current economic and environmental situations.

While previous research has shown that support is often not as high when wind projects are actually proposed in communities as when they are theoretically suggested, it is nevertheless encouraging that Americans are increasingly thinking about the benefits that wind energy provides. Furthermore, it is important to note that projects developed by National Wind generally face very little opposition, if any, due to our strong emphasis on community involvement, from project founding through operation. Local community members are key stakeholders in our projects financially and also provide significant input via regular advisory board meetings and landowner forums during the development process. Non-community-owned wind projects, on the other hand, often face opposition because they fail to offer landowners these benefits.

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