Wind Power cannot work in the Free Market without Massive State Subsidies

Posted by PITHOCRATES - December 9th, 2012

Week in Review

A typical size of a wind turbine is around 3 megawatts.  Whereas a typical steam turbine (the kind spun by a coal-fired power plant) can be as big as 500 megawatts.  So you would need about 167 wind turbines to produce the output of one steam turbine.  But even then they won’t produce the same amount of useable power.  Because the wind doesn’t blow all of the time.  Making wind power a very expensive, intermittent power.  So expensive that no free market solution exists.  Which is why the government heavily subsidizes wind power (see 7 Myths About the Wind Production Tax Credit by David Kreutzer, Ph.D., posted 12/4/2012 on The Foundry).

The wind production tax credit (PTC) has created an industry that produces overpriced, intermittent power, and it will continue to produce overpriced, intermittent power so as long as there is a PTC to pay for it…

… if wind were already cheaper, then it could compete right now. If it is on the verge, then wind-power producers could enter into long-term contracts (which they already do) that would allow them to recoup their investments in the near future when wind will supposedly be so cheap. Neither case argues for subsidies…

The legislation in force has been very clear ever since it was written: Wind turbines put in place by December 31, 2012, qualify for 10 years of production tax credits. Windmills placed in service this year will continue to receive credits—which are worth 40 percent or more of the wholesale value of electricity—for every kilowatt-hour generated until 2022…

Subsidies may well provide jobs and income for those receiving the subsidies, but, as the Spanish experience illustrates, whatever job-creating mechanism the subsidies put in play is offset by running this same mechanism in reverse elsewhere: Financing the subsidies requires taxing other parts of the economy.

A 40 percent or more subsidy?  Anyone that needs a 40% subsidy to stay in business shouldn’t be in business.  That’s a lot of money pulled out of the private sector to produce substandard electric power.  If we went with reliable electric power from coal-fired power plants we wouldn’t need to pull a 40% subsidy from the private sector.  And the power would be first-rate.  Whether the wind blows or not.  Which is why coal-fired power plants work in a free market economy.  And wind power does not.

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