End of tax credit a blow for wind power industry
Up to 37,000 jobs, many in Illinois, could be lost as projects are halted or abandoned
By Julie Wernau, Chicago Tribune reporter
The wind power industry is predicting massive layoffs and stalled or abandoned projects after a deal to renew a tax credit failed Thursday in Washington.
The move is expected to have major ramifications in states such as Illinois, where 13,892 megawatts of planned wind projects — enough to power 3.3 million homes per year — are seeking to be connected to the electric grid. Many of those projects will be abandoned or significantly delayed without federal subsidies.
The state is home to more than 150 companies that support the wind industry. At least 67 of those make turbines or components for wind farms. Chicago is the U.S. headquarters to more than a dozen major wind companies that wanted to take advantage of powerful Midwestern winds.
http://www.chicagotribune.com/business/ct-biz-0217-wind-ptc–20120217,0,7153601.story
h/t to CRS, DrPH
Chicago got dubbed the “windy city” because of the claims of the local politicians. It remains appropriate even after the locals go national.
Windmills in the midwest have another issue: winter. And ice. They won’t last 20-30 years. They’ll fall apart much sooner. After throwing ice shards many hundreds of meters.
Of course, a tornado or two could also dismantle them.
More subsidies are obviously needed. (sarc)
(full disclosure: I lived in and around the Windy for over 20 years.)
The devil is in the details, isn’t it? Subsidies is defined pretty loosely in the article and many of the claimed subsidies for Big Oil apply to all manufacturers. Do you want to end those tax breaks for everybody, or just industries you don’t like?
There is also a principle in our tax code that allows for legitimate business expenses to be deducted. The problem with this is the definition of a legitimate business expense is very open for interpretation and it makes for a system that’s ripe for corruption.
A much better system would be a flat tax system, with few or no deductions and a low rate. An even better system than that would be to eliminate business income taxes altogether. Businesses don’t pay taxes, they just collect them from their customers and owners (stockholders).
William Martin says:
February 17, 2012 at 5:48 am
I was rummaging around the web, looking for information on broken turbines. low and behold, I found this !
http://wattsupwiththat.com/2011/03/19/the-reality-of-wind-turbines-in-california-video/
It appears the construction quality of wind turbines is ‘variable’, judging from some turbines lasting 20 years. I suspect the quality of most turbines is likely to be compromised by efforts to minimise cost.
I was also looking for Russian wind farms that might have been disabled by snow storms, not an easy task ! my search led me to conclude that windpower is a very fledgling industry in Russia (lucky them). let’s hope they learn from the numerous windpower mistakes of western nations.
http://en.rian.ru/Environment/20101112/161303912.html
Bill
You could also have found this!
http://www.telegraph.co.uk/news/picturegalleries/uknews/8943507/Parts-of-Britain-are-battered-by-gale-force-winds-and-storms.html
(from Google “wind turbines cath fire UK”)
Makes a great picture and REALLY shows up wind farms!
“Barack Obama: “Under my plan of a cap and trade system, electricity rates would necessarily skyrocket.” (January 2008)”
It wasn’t Obama’s plan at all, it was his financial backers plan. I wish he’d own up to that.
There is a new report on wind power statistics for Europe ( http://www.ewea.org/fileadmin/ewea_documents/documents/publications/statistics/Stats_2011.pdf )
The astonishing thing in this report is that in 10 pages of text, there is not a single statement as to the actual utilization, i.e., power produced in KWH/over annual potential production. It also introduces the nebulous notion of a “normal wind year” (p11). A bit of sleuthing and arithmetic yields the following facts from the report. In 2011 there was 93957 MW of installed wind power capacity in the 27 EU countries. In a “normal wind year” this is claimed to produce 204TWh of electricity. Now this amounts to an assertion that the utilization at the end of 2011, a “normal wind year”, would be roughly 24.8%.
This, I believe, is a flat out misrepresentation of actual utilization in the EU-27.
Lets assume that the EWEA has an accurate handle on the actual installed capacity. In 2010 they claimed that the installed capacity was 84650MW in the EU-27 (p4, op cit). How much electricity was actually generated by wind. This is a tough figure to find in any EWEA document. However, the EU (http://epp.eurostat.ec.europa.eu/statistics_explained/images/9/97/Electricity_Statistics%2C_2010_%28in_GWh%29%2C_table1.png) says that the EU-27 143.638TWh. (Note the difference from the EWEA’s 204TWh figure). Bottom line, in 2010 the utilization appears to have been 19.5%. 2011 figures are not available.
Going forward I would argue that the 20% figure is more reliable than the generally cited 25%.
Paulino says:
February 17, 2012 at 6:45 am
“then indeed why subsidize? 41×10^9 US$ doesn’t amount to penny and quarters, does it? And let’s account for all the costs that each energy source, and then the monumentally stupid coal plants will be eliminated as well.”
Please give us a breakdown of the costs these “monumentally stupid coal plants” cause. In every comparison I have seen coal is the second cheapest energy after Big Hydro.
I’m not questioning your belief system. Just give us your numbers. What costs?
Just “in case” (they will!!) one or more of our warmist brethen point out that is was only one turbine and wasn’t necessarily caused by strong winds I refer to this link
http://www.caithnesswindfarms.co.uk/accidents.pdf
Total number of accidents 1142 over 42 years.
Number of fatal accidents 87 causing 99 fatalities in that period.
Fire is the second most common cause of accidents with a total of 168 fire accidents receorded.
REALLY “green.”
Kev-in-UK says:
February 16, 2012 at 11:41 pm
I am no economist, but seeing the way the world ‘jumps’ headlong into things,
It is called insider trading. Politicians have been doing it for years. Back in the railway era, they would buy up land ahead of the rail line, then announce the decision on the rail route. The same thing happened when the highway systems were built.
For example, how many politicians in the US would sign up to approve a coal plant if Hansen had just been arrested for protesting coal death trains? So, if you wanted to make some big money, you would schedule the protest a couple of days before a political vote, and short coal stocks at the same time. Similar, if you knew which way the US decision was going to go on the Keystone pipeline, you would short the stocks involved immediately prior to the decision. [SNIP: Fred, this is skating dangerously close to a site policy violation. Supply reputable links and we’ll approve it. -REP] Ask yourself why.
FakeGate at De SmogBlog.
Fake industry in Illinois. No subsidies, no industry. Go figure.
US foundations have poured $300 million dollars into Canadian environmental protest groups over the past ten years. Perhaps they could put their money where their mouth is and spend it on subsidizing the wind industry instead, and actually make a difference.
Wind turbines produce very little actual useable power over each year. So if they don’t produce power, people must realize that wind turbines are really just symbolic. They are almost religious symbols for the environmental left.
Ever notice how geothermal power is not symbolic for the left? Its because geothermal plants are dark, square and industrial looking. So lefty’s don’t like them.They prefer tall white spinning crucifixes.
When lefty’s see them spinning away on a far hillside, it gives them a warm and fuzzy feeeling, and it says to them “Have faith, we are here”. Sure they generate rental income and increased sales tax revenue to a small extent but the largest reason they exist is symbolic.
Mining tax credits has been big business for many years in wind and ethanol. The annual renewals of the wind energy credit made for faster churning of influence pedaling in Washington. As evidence of the fake industry viability, watch how fast the industry implodes in the presence of low natural gas prices. This all reminds me of the solar panels mounted on the roof of the White House by the Jimmy Carter con man president when solar was 20x more expensive than today and then there was the 4x oil price guarantee for oil shale from Colorado also set up by the same demonstration project President. In this context, no energy policy is decidedly better for the country than targeted distortions of markets with taxpayer resources.
polski says:
February 17, 2012 at 6:51 am
Let’s say that the subsidies are removed. Let’s say that many wind farms go bankrupt. Now what should be done with all those wind turbines. Is there an opportunity for some bright, hard working, free enterprise individual to somehow make a viable business out of all this mess?
What would a large amount of intermittent power be good for? Milling wheat, corn or soy? Water heating/treatment for local towns. Powering compressors to aerate lakes and sewage ponds? Running massive lights to annoy the neighbors?
Since they are so big and heavy would they not be difficult to just scrap and recycle?
Interesting questions, and I’ll bet some entrepreneurs are asking the same questions. Taking your last point first, I wonder what those yearly leases specify be done with the massive chunk of concrete and rusting hulk atop it when the lease is not renewed? How does the landowner get back his farmland, by suing a the bankrupt equivalent of Solyndra? Good luck with that.
As for what they could “be good for,” probably the most logical use is the old-time use–storing water for use later. On small farms a century ago, that was the main use of a windmill–to fill a cistern up on a hill when the wind was blowing so that water would be available when needed to water stock, or for cooking and drinking. It would make sense to use windmills as the primary power source for filling local water towers, I’d think, only kicking in the grid power supply when the level in the tower reached a minimum level, running it for a brief time to get the head back up a bit, while waiting for the next wind to fill it to capacity again.
In fact, if a town had a significant overcapacity of water storage, they could fill the tower to capacity, then install turbines to generate power with the excess storage for a time when the wind wasn’t blowing. If the storage was full, the wind power could feed the grid directly. So, first the wind power generation goes to the water storage, then to the grid. With enough storage capacity, a town or large farm might conceivably make efficient use of a windmill or two or three nearby, assuming they could pick it up for pennies on the dollar.
Lots of engineers in here. If you got a windmill for $1 in good working order (and some will sell for that, or not sell at all, if the subsidies really do expire), how much water storage per windmill would you need to set up a system that supplied a relatively constant supply of power, assuming reasonably reliable, but intermittent winds? And how much does building such storage cost, plus installing turbines, etc.?
One thing’s certain. Someone’s going to make money if the windmill operations fall apart. The question is if it’s just the scrap dealers, or someone higher up the economic food chain?
I doubt if the subsidy will really expire. But if it does, it only means that Illlinois taxpayers will be expected to make up the difference. As in one of the brokest states, in the brokesest country in the history of the planet throwing money to the wind. Well, at least into the pockets of the annoited.
Paulino says:
February 17, 2012 at 6:45 am
Smokey,
then indeed why subsidize? 4110^9 US$ doesnt amount to penny and quarters, does it? And lets account for all the costs that each energy source, and then the monumentally stupid coal plants will be eliminated as well.
And you caught me, Im hypocrite, but Im not proud of it, I hope we can change things, that will change not matter what. I also hope we are able chose the timing of the change, and its not imposed on us because we failed to act. Now promise me that, when wind and solar catch-up with oil and gas, youll turn off the light.
Frank,
Im a he. And poor lil Heartland institute, only wants to interfere with the teaching of science in schools. You how kids are these days, always questioning grown-ups., we must not suffer that!
—
Sorry. Didn’t want to assume him or her :^)
And I’m glad you’re not proud about being a petroleum hypocrite – none of the other warmist visitors we get at WUWT ever want to broach this topic (they are too afraid). You should stop and think about all of the wonderful things we make with petroleum – products that make our lives better. Here’s a partial list for you:
http://www.ranken-energy.com/Products%20from%20Petroleum.htm
And, finally, as a mechanical engineer, I really have nothing against solar and wind power (despite the bird kills). If they can be made economically viable under current market conditions, then GREAT. In fact, you, Paulino, should sell everything you own and invest it in wind and solar energy. Better yet – start a company and show us how to make these things! Show us how its done. None of the warmists who visit here (as far as I know) ever have any “skin in the game”. They pretend to love “the planet” and vow to have a small “carbon footprints”…just as long as the lights go on when they flick the switch, and their chai tea and organic tofu arrive at the grocery store on big 18 wheel trucks.
Rocky Road above: “Before making rash statements like this, Paulino, would you please show some hard economic figures and/or citations supporting your position. ”
Actually Rocky, I’m seeing lots of assertion and anecdotal information on this thread, and very little, (actually nothing) in the way of sound, fact based analysis or comment on this thread, which is disappointing and below the general standards of WUWT. That is, however, the way it is whenever there is an article on wind energy, ethanol, biodiesel, and solar. On these topics the anti renewable crowd is just as irrational and emotional as the pro.
As far as all the comments about variability of power supply and on-going cost are concerned, the entities that install these generators are not unsophisticated. Their analysis does take into account the variability of power and the costs of long term maintenance and the effects on their electric grid. I’m sure they also take into account the subsidies available, mandates of government, and the potential lack thereof. Yet those power companies, (around here in Iowa it’s Mid-American Energy) are building wind farms and are continuing to operate them. With the very high initial cost of wind installations, the wind farms are not going to be shut down immediately on reduction or elimination of a subsidy, most of the cost is up-front, and will not be unspent by shutting down the facility.
“As in one of the brokest states, in the brokesest country in the history of the planet throwing money to the wind. ”
Well since the dollar is not backed up with gold and we don’t even print much actual paper dollars anymore, in reality all we really owe are a large number of electronic ones and zeros. In other words, we don’t actually owe anything of substance to anyone. And neither do they.
So spend with confidence my friend.
Richard deSousa says:
February 17, 2012 at 12:34 am
“The move is expected to have major ramifications in states such as Illinois, where 13,892 megawatts of planned wind projects — enough to power 3.3 million homes per year — are seeking to be connected to the electric grid.”
I like the way these scoundrels embellish these pie in the sky numbers. Most of the times the projected estimates will never be realized!
++++++++++
Exactly. What is the installed capacity and what is the generated output.
3.3m homes?? More like 0.33m homes, if they can manaage to get the rated output 10% of the time. No doubt the 3.3m is the result of a very simple ‘model’ of how much power a home needs and when, plus a ‘model’ of how wind power works. That will in turn be based on a simple ‘model’ of how much wind there is. And so on.
US actions in the Gulf solely to maintain security of oil supply have cost trillions. http://www.time.com/time/nation/article/0,8599,1868367,00.html
This is a subsidy.
Implicit insurance costs of the nuclear industry are carried by nation states. Uk decomm costs ($100bn+) are paid by the UK state. Nuke waste disposal costs are unresolved. Coal’s health & enviro costs are externalised. Wind power is a relatively small operation, mostly an efficiency measure for gas power stations. All industries cry wolf when their subsidies are threatened. I have no idea why skeptics would dislike wind power, it’s hardly a threat to our way of life or more of a subsidy drain than other energy sources. It only makes sense in certain locations and it can only be used up to about 20% in an energy mix due to diminishing returns.
Wind turbines have improved in efficiency in recent years. Solar has a had a big jump and will be more viable in certain locations now.
Anyhow my point is that you shouldn’t take all your ideas from the same box. You can be a skeptic about global warming without prejudging all attempts at alt power generation.
Ontario turns to wind power!
Hydro One invests in wind energy to reduce dependence on oil from Alberta:
Arnold Ring (@ArnoldRing) says:
February 17, 2012 at 8:17 am
“US actions in the Gulf solely to maintain security of oil supply have cost trillions. http://www.time.com/time/nation/article/0,8599,1868367,00.html
This is a subsidy.”
You seem to imply that “US actions in the Gulf” have been “solely to maintain security of oil supply”. This is obviously false. Maybe I have misunderstood you.
“Coal’s health & enviro costs are externalised.”
Can you give us the breakdown of these costs?
I hear a lot of windpower companies breaking wind this morning – about time. Maybe the birds will sleep easier.
Arnold Ring (@ArnoldRing) says:
February 17, 2012 at 8:17 am
“Wind power is a relatively small operation, mostly an efficiency measure for gas power stations.”
Do you want to imply that wind power makes gas power stations more efficient? The opposite is true, it makes them more inefficient, as the turbines will most of the time not run with their optimal speed. How does wind power make gas power more efficient?
I was ahead of my time.
Thanks should be given to those in the congress who worked to end the tax credit.