Wind power appears cheap because of bad cost accounting
The Minneapolis Star Tribune ran a story yesterday (“Power line congestion leads to wind turbine shutdowns, denting county budgets”) about how wind farmers and county governments in south and southwest Minnesota aren’t selling as much of their product as they’d like.
The culprit lies in transmission bottlenecks. There is not enough capacity available on the electrical grid, at times, to move wind power from where it is produced — across the landscape — to where electricity is consumed.
Wind farmers only get paid when the wind blows and they can get their product to market. County governments only get tax revenue when wind farmers get paid.
The solution, construct new transmission lines, carries a price tag of $2.2 billion. Who pays?
You, the electricity consumer, will pay. Neither wind power producers nor county governments will contribute any money toward the construction of new power lines.
Had the cost of the added power lines been carried by the wind power developers, many of these projects would never have been built.
If I owned a factory in Marshall, MN, and my customers are in Minneapolis, I would need to rent a truck to get my product to market. Wind farmers get the customers to buy the truck and build the road for it to drive on, whether or not the customers want or need the product.
To add insult to injury, the $2.2 billion dollar cost of the transmission lines is assigned, not to the wind farms who needs it, but to the region’s coal-, natural gas-, and nuclear-powered generators. These are the resources powering the grid most of the time. Since they are powering the grid, most of the time, they are assigned most of the cost of operating the grid.
So coal power, for example, is penalized for being reliable and available, making it appear more expensive than it really is. The higher apparent price of coal-power hastens its shutdown as being “too expensive.”
When coal is shut down, the grid costs are shifted to nuclear and natural gas and the process repeats. The power source causing the costs to be incurred, wind power, is never assigned blame, but perversely benefits from the misassignment of transmission costs.