For example, a well-intentioned NC environmentalist was
recently trying to convince me that wind energy was a great thing for North
Carolina. I politely explained that industrial wind energy is a technical, economic and environmental
net loser.
In response, he disputed the economic part by writing me: North Carolina
has 0% electricity from wind, and its average electrical rate is 8.54¢/KWH. Iowa has
20%± electricity from wind, and its average electrical rate is 7.56¢/KWH. That otherwise, apparently intelligent individual
considered that information to be proof positive that wind energy is very
economical.
So, the question is: does that tidbit prove that
wind energy is lower cost?
NO, and here is a brief
explanation as to why not. The reality is that NC's
residential electricity rate is about 40%
lower than Iowa's (!)— so what would be the conclusion from that?
Electricity Costs: North Carolina vs Iowa
A well-intentioned NC environmentalist was trying to convince me
that wind energy was a great thing for North Carolina. I explained that
industrial wind energy is a technical, economic and environmental net loser.
In response, he came back with a typical Sierra Club answer (a
purposefully superficial soundbite, aimed at deceiving uninformed citizens): North
Carolina has 0% electricity from wind: avg electrical rate 8.54¢/KWH. Iowa has
20%± electricity from wind: avg electrical rate 7.56¢/KWH. Does that tidbit
prove that wind energy is lower cost? Absolutely
not, and here is a brief
explanation why:
1) Let’s start by looking at the
claim more closely. Not sure where thosenumbers came from but the 2014 EIA
data shows that the latest Iowaresidential electricity
rate (the least manipulated electricity indicator) is10.88¢/KWH.
The same 2014 EIA data
shows that the latest North Carolinaresidential
electricity rate is 10.93¢/KWH: essentially the same.
2) There is often a significant
difference between the electricity produced in
a state and what is consumed in
that state (which is not calculated, but estimated). Just because 20%± of
Iowa’s electricity production is wind energy, that does not mean that
20%± of Iowa’s electricity usage came from wind energy.
3) It is impossible to
meaningfully compare electricity costs of two such states, as neither one is an
electricity island. In this case, Iowa is part of an eight state group (Midwest
ISO), and North
Carolina is paired with South Carolina. The
electricity costs in any of these states is heavily influenced by the composite
picture of their regional partners.
4) If one persists in the
state-vs-state illusion, then there are plenty of states that could be used to “prove”
that wind energy is extremely expensive. For example, let’s compare NC to a
more representative eastern state: New York, which has an RPS and has been heavily
promoting wind energy: North Carolina’s residential electricity rate is
10.93¢/KWH, New York’s residential
electricity rate is 18.48¢/KWH. Case closed!
5) When a wind project is built,
there often is a reduction in gas use. A superficial assessment would conclude
that this reduces CO2, 1:1. However:
a) the type of gas facility that is reduced is typically a “CC,”
which is a high efficiency, low CO2 source (and it’s not necessarily in the
same state),
b) on the other hand another type of gas facility (“CT,” again,
not necessarily in the same state) is usually added in, as it is a faster responder
needed to balance the wind energy. The problem is that CT is a low efficiency,
higher CO2 producing type of gas turbine, and/or
c) there is a reduction in the Grid’s safety margin. Even though
this is a wind specific cost, it is always disguised.
6) It’s interesting that Iowa is
put forward as a “success” for wind, when in reality coal is by far its largest
source for electricity. The lowest cost source for good US coal is Wyoming — so
coal costs in nearby Iowa are much less than in NC. [According to the EIA the
difference in coal costs amounts to 2¢±/ KWH.] So the amount of coal used, plus
Iowa’s proximity to Wyoming, are two major reasons why Iowa is a relatively low
cost electricity state.
7) An economic reality for the
Iowa situation is that the wind producers there are getting substantial taxpayer
subsidies (between Section 1603 Grants and
Production
Tax Credits). These amount to another
3¢±/KWH in Iowa wind electricity costs that are shouldered by taxpayers instead
of ratepayers.
8) An additional economic
influencer is that Iowa wind developers are financially benefitting from an
artificial program called RECs (Renewable Energy
Credits). This means that they can
sell their electricity twice: once to a regional utility company, and then get
a second payment from a utility company in a state that has an RPS. The net effect
of this contrived arrangement is that the electricity rates are artificially
lower in Iowa.
9) Another reality in the Iowa vs NC
comparison, is that Iowa does not have a consequential RPS, while NC does. What this means is that NC ratepayers are effectively
mandated to buy Iowa’s wind energy RECs. That requirement translates to
artificially raising NC’s rates, especially compared to Iowa’s.
10) Taking all these factors into
account results in Iowa’s residential electricity being 4¢±/KWH (40%±) more expensive than
North Carolina’s. This premium is purposefully being
disguised by wind energy proponents, so that the true consequences of their energy
policies will not be noticed by consumers. See this recent report, which comes to the same conclusion: the states with
more wind energy are paying a premium. Don’t be taken in by the Iowa ruse…..John
Droz, jr. 3/17/14
(I'm circulating this to a wider audience, as some of the
answer will have some applicability to you, no matter where you live.)
Thank you for your continued support!
John Droz, jr., physicist & environmental advocate
As always, please pass this on to open-minded
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