Future of Wind “Uncertain” After Federal Subsidies Expire
The U.S. Department of Energy has released its annual Wind Technologies Market Report, which you can access here. I’ve included some highlights from the report below:
Government mandates, not free markets, are responsible for most wind investment. The introduction of the study notes that wind turbines have become more efficient over the last decade, but much of the growth is the result of federal subsidies and state-level renewable energy mandates:
Wind power capacity in the United States continued to experience strong growth in 2017. Recent and near-term additions are supported by the industry’s primary federal incentive—the production tax credit (PTC)—as well as a myriad of state-level policies.
Wind capacity additions have also been driven by improvements in the cost and performance of wind power technologies, yielding low-priced wind energy for utility, corporate, and other power purchasers. The prospects for growth beyond the current PTC cycle remain uncertain, however, given declining tax support, expectations for low natural gas prices, and modest electricity demand growth.
Older wind turbines suffer from performance degradation, particularly within their second decade of operation, and some must be repowered (i.e. upgraded to be more efficient): This is a key thing to understand. Wind turbines only last for 20 years before they must be replaced. In contrast, a coal, nuclear, or natural gas plant will produce electricity for well beyond 30 years, with many producing affordable, reliable electricity for 50 years.
Older projects appear to suffer from performance degradation, particularly in their second decade of operations: This is key, because federal government estimates show wind turbines lasting 30 years, when in fact, they don’t.
Some turbines were only in service for 9-14 years before they were repowered: Repowering wind turbines means they are upgraded with newer equipment to make them more efficient. In 2017, 1,317 turbines, representing 2,131 MW of capacity were partially repowered. These improvements included installing larger rotors.
According to the report, the primary motivation for partial repowering was to increase operational efficiencies while also re-qualifying for the PTC (emphasis added). The federal Production Tax Credit gives wind producers a tax credit for ten years after the wind turbine has been installed. Repowering gives wind turbines another 10 years of taxpayer subsidies.
Capacity factors are improving Focusing on performance solely in 2017 helps identify underlying trends: The average 2017 capacity factor among projects built from 2014 to 2016 was 42.0%, compared to an average of 31.5% among projects built from 2004 to 2011 and just 23.5% among projects built from 1998 to 2001.
The report did make note of falling technology costs for wind turbines, which is true. Wind turbines are more efficient today than they were ten years ago, but they are still no substitute for coal, natural gas, and nuclear generators, which is proven by the fact that we rely on these sources of electricity to keep the lights on when the wind is not generating any electricity.