Recently, wind energy advocates have attempted to dress up wind turbines as the solution to the world’s energy needs. In fact, one recent study actually claimed that they are the entire solution for growing U.S. energy demand – at least on the East Coast. Unfortunately for the taxpayer, businesses, and everyone who uses electricity, the motives of the wind energy crowd are not as pure as those of Monsieur Carton.
Take the recent Cape Cod wind project as “Exhibit A.” Opposition to the project, which proposes placing 130 wind turbines off the coast of Cape Cod in Massachusetts, has gained national attention. Wildlife experts, the fishing industry, tourism interests, and even the late Senator Ted Kennedy have lined up to oppose the project on the grounds that the massive size of the wind farm would permanently disrupt the Cape ecosystem and significantly damage the aesthetics of the popular vacation region.
What hasn’t received national attention is the stunning taxpayer subsidized profits the developer is expecting to reap from the project. A study by the Massachusetts based Beacon Hill Institute found that the proposed $1 billion dollars in subsidies from the project would contribute to a nearly 25% return on equity by investors – more than twice the average historical for return for all corporations. Add taxpayers to that list of groups opposed to the project.
In light of the staggering costs (and privately captured profits by the developers), it’s easy to understand why so many stakeholders have rallied against the project. It’s not just a case of NIMBYism (not in my back yard) by wealthy home owners, or the tourist industry, or fisherman. It’s a case of rational economic assessment.
Opponents have weighed the benefits of the project – namely generating 2.5% of Massachusetts electricity from wind – against the costs. The staggering financial cost of building and generating the power and the aesthetic costs of putting up 130 windmills larger than the Statue of Liberty greatly outweigh any list of benefits even the most creative proponent can muster. The proposed wind farm is likely to produce power at a gross cost (pre subsidies) of 18.8 cents/kWh, in a state where the average cost of electricity generation was just under 7 cents/kWh in 2007. Any supposed benefit from fuel saved, to benefits to the environment, to enhanced energy security for the state, will never produce enough benefit to offset that 11.8 cent /kWh price increase.
Project developers support moving forward because their own personal cost benefit analysis is subject to a very different equation than that of the general public and overall regional economy. For developers, the benefits are massive profits through government subsidies and the costs, nothing more than a market appropriate level of risk.
Ignoring this reality and brushing the costs of wind power generation under the rug is quite frankly, unethical. The East Coast could theoretically power itself solely from wind power alone, but only in the sense that I could power my house with a legion of hamsters running on a wheel. It might be possible to generate adequate amounts of electricity, but the intermittent power supply and the enormous costs demonstrate that it’s simply not a logical investment.
This tale of two realities amounts to a work of fiction, far more complex and arguably less plausible, than Dickens’ Tale of Two Cities.