Editor’s Note: In recent months, we’ve published a handful of posts arguing for the extension of the Production Tax Credit set to expire at the end of the year, unless Congress acts. The impact to Col wind-energy states is already being felt, as evidenced by Vestas Wind Systems workforce reduction at its manufacturing plants in Colorado, and some projects being shelved in states like Wyoming. Here is another take on this important subject by Bill Opalka of RenewableEnergyBiz.com, who cites a new study that essentially says the wind should stand on its own –
but it can’t.
The wind production tax credit (PTC), is wasteful, distorts markets and has been on the books long enough for the industry to stand on its own, a new study says.
“Wind Intermittency and the Production Tax Credit: a High Cost Subsidy for Low Value Power” makes those points and more in an Exelon Corp. (NYSE: EXE) commissioned study released this week.
“We find that the vast majority of the Nation’s wind resources fail to produce any electricity when our customers need it most, and that the subsidy is adding billions of dollars of hidden costs while undermining the reliability of the grid,” the study says.
The study was done by Jonathan A. Lesser, president of Continental Economics Inc. Exelon, the biggest owner of nuclear generation in the U.S., was tossed out of the wind energy’s trade association for lobbying Congress to let the PTC expire. Exelon also owns 900 MW of wind generation.
The study analyzed four years of data from the Electric Reliability Council of Texas (ERCOT, with 10,000 MW of capacity), the Midwest ISO (MISO, with nearly 12,000 MW), and PJM Interconnection (PJM, over 5,000 MW).
“In all three regions, over 84% of the installed wind generation infrastructure fails to produce electricity when electric demand is greatest,” the study says.
Wind generation is most prolific in the spring and fall, when the demand for electricity is lowest, and the smallest amounts of wind generation occur in summer, when the demand for electricity is greatest.
The study also says integration costs, including back-up gas-fired generation and maintaining power system quality due to wind’s fluctuations, add an additional $500m per year nationwide. The study advocates abolition of the PTC, which a Senate-proposed extension would cost the federal Treasury $12.2bn.
The American Wind Energy Association dismissed Exelon from its board and banned in from the organization in September when the company lobbied against that proposa. MORE …