A Brief Cost-Benefit Analysis of Industrial Windpower

Here's a cost-benefit analysis for a relatively small windplant with sixty-six 2.5 MW turbines for a combined rated capacity of 140 MWs. Each turbine will stand about 430 feet tall and will require around 15 acres of cleared land and infrastructure support. Spaced eight to a mile, the array would extend for over seven miles. With a generous capacity factor of 30 percent, this facility might contribute 42 MWs of electricity annually to the PJM grid, .000026 percent of the grid's annual production of 163,000 MWs—an amount that would be engulfed in the first minutes of our increasing demand for electricity (at two percent per year). If this power were generated by coal or nuclear, with capacity factors approaching 90 percent and with a predictable and constant stream of energy, it would service about 30,000 homes. However, because of the intermittent, unpredictable nature of wind, no homes would be powered by the wind industry. Given this limitation and the fact that industrial electricity must be consumed immediately, wind can generate only energy, not capacity, to the electricity grid.

Because of federal and state subsidies to the wind industry, corporate investors should expect:

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  $15 million annually from the sale of electricity, given state laws requiring utilities to purchase "green" energy at prices beyond competitive rates. The wind industry will likely charge utilities at least five cents per kW hour—twice the cost of coal. This cost will ultimately be borne by ratepayers.
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  Over $200 million leveraged over the ten year life of the wind industry's Congressional production tax credits, currently at 1.9 cents per kW hour. Since production tax credits will result in a deficit to the federal treasury, this loss will have to be made up by taxpayers.
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  Equity investors such as AES and Florida Power and Light will have access to wind's double declining capital depreciation schedule, paying off the capital costs totaling about $140 million in little more than five years. Altogether, publicly funded tax avoidance schemes reimburse wind developers as much as two-thirds of the capital costs of each wind turbine.

The wind company might employ three or four maintenance employees at a salary of about $18,500, with no additional benefits and no guarantee they would be county or state residents. Its contracts with property owners offer unsecured promises of a few thousand dollars per year. Its promises about adding millions of dollars annually to the local public treasury often often spurious public relations gestures, since the company can afford to retain accountants with a sophisticated knowledge of energy tax law who will find ways to offset any perceived tax obligation, as has happened with windplants in West Virginia and Pennsylvania.

Jon Boone Oakland, MD