U.S. Wind Turbine Output Drops Steeply After Ten Years, When The Subsidies Expire
A newly-released study from the Lawrence Berkeley National Laboratory (LBNL) drops an enormous bombshell on wind energy in the United States.
The study, which was published in the peer-reviewed, scientific journal Joule, examines production decline data from 917 wind facilities throughout the United States, and found that wind turbines become 13 percent less productive by the time they are 17 years old, and that most of the decline in production occurs after year ten, which just so happens to be the time frame when the projects are no longer eligible for federal subsidies.
It’s All About the Subsidies, Baby!
Wind power is entirely dependent upon government subsidies to be profitable. Investors like Warren Buffett know this, and the wind industry does, too, which is why they are constantly lobbying to get the wind Production Tax Credit extended. The interesting thing about the LBNL study is that it quantifies how production plummets once wind companies are no longer able to line their pockets with your tax dollars.
The figure below shows performance declines from new (wind turbines built after 2008) and old (pre 2008) turbines, from the 917 wind-facility sample. The old wind turbines saw a large decline after year ten, while the study did not elaborate on the fall off in production from “new” facilities after ten years because not enough data were available.
The study even hypothesized why this might be the case:
“The coincidence in timing between the performance drop and the 10-year window of eligibility for the federal PTC is notable. It suggests that maintenance and operating strategies change when projects lose access to the sizable tax benefits afforded by the PTC. One plausible explanation, noted by Wiser et al.,17 is that plants that earn sizable profits from power sales and the PTC warrant more intensive O&M activities in order to maximize production and thereby profitability.”
“After the window of PTC eligibility has passed, however, operating profitability declines and, therefore, so does the operational rigor, at least to a degree; it may be more profitable to economize on O&M expenditures after this point, even if it means that performance tends to degrade more with time.”
Translated into layman’s terms, wind operators appear to be skimping on maintaining their wind turbines after the subsidies expire because it is no longer as profitable to keep the turbines in top shape. Without subsidies, the cost-benefit simply doesn’t exist to maintain the turbines for maximum productivity and reliability.
This analysis completely eviscerates any claims that it is “the market” that is causing coal plant closures in the U.S. and not the market-distorting subsidies that wind and solar receive. If wind were truly as low cost and reliable as its supporters claim it is, wind producers would continue to take care of their investments after the subsidies expire. The fact that they are not speaks volumes about the viability of wind power.
Conclusion
This study is the most comprehensive confirmation to date that subsidies drive the demand for wind turbines in the United States, and not free market forces. The fact that wind turbines see a 13 percent decline in electricity output after 17 years also has profound implications for how wind energy costs are modeled. We will discuss these important implications tomorrow.