Airy claims for natural energy

Published in European Voice, Vol. 10, No. 12 – March 16, 2006

The recent European Wind Energy Conference in Athens celebrated the familiar environmental panacea of clean, sustainable energy. The wind lobby’s infectious enthusiasm has long been drifting in the direction of policymakers.

The European Commission’s new energy strategy paper is a case in point, making grandiose, but unsubstantiated, claims for renewable energy, “now starting to compete on price with fossil fuels”.

The dream is faithfully repeated – reduced dependence on fossil fuels and energy imports, greenhouse gas emissions curbed and – green icing on the cake – jobs are created.

The shining example is Germany, where wind energy has been promoted and subsidised since the 1980s. The starting point was to guarantee prices from wind-power at 90% of the average retail price.

Tax breaks and schemes to develop poorer regions gave wind-power a further boost, and Germany now produces around 3.1% of its electricity from wind energy, creating, supposedly, some 45,000 jobs.

Close up the picture is less rosy. Following the liberalisation of electricity supplies, utilities must now pay a new price for wind-generated power of roughly three times the liberalised price of conventional production, an effective subsidy of about €4 billion.

With a handout of €4bn, anyone can create jobs and, at €80,000 per job per year, sending these workers on a permanent holiday to Barbados would be better value.

The real picture, according to a 2004 study by Bremen University Energy Institute, is that wind farms actually reduce jobs because of higher energy prices.

And wind is unreliable. German wind generators operate at full capacity for around 1,400 hours a year on average, just over 58 days’ worth. The UK, with better wind conditions, only achieved a third of its wind-power capacity in the unusually windy year of 1998.

The Commission’s strategy paper boasts that “the EU has now installed wind energy capacity equivalent to 50 coal-fired power stations”, but omits to mention that no power station has closed down as a result.

Any savings on carbon emissions can – and are – simply transferred. Carbon-emission trading allows companies to buy or sell their emission allowances, locally or internationally. A 2004 report for Germany’s Ministry of Economics showed that carbon reduction would be zero when utilities sold off any savings they had made.

In truth, Germany’s wind-energy promotion has not only been economically damaging, even the ecological gains are a chimera. If wind really is the energy of the future it must prove itself in the market without subsidies. And this has yet to happen. Decisions are being made on the basis of artificial models with hidden costs for taxpayers and consumers. The key admission in the EU energy strategy is that alternative sources “such as off-shore wind, wave and tidal energy need positive encouragement to be realised”.

“Positive encouragement” translated into plain English means public subsidies. As for jamborees such as the Wind Energy Conference, is it mean-minded to ask whether the conference-goers’ air-flights to Athens have done more environmental damage than any good likely to emerge, any time soon, from their deliberations?

Republished as “The high price of free power” in the “The Providence Journal” (Rhode Island), 28 March 2006.

CURIOUS ALLIANCES pit U.S. Sen. Edward Kennedy against his environmentalist allies in a dispute over a proposed wind farm in Nantucket Sound. There are shouts of NIMBYism, saving the environment, damaging the environment, and plenty more. But there is little about wind power’s huge subsidies, its inefficiency, and, indeed, its damage to the environment.

Supporters of the Nantucket Sound project say that wind power reduces greenhouse-gas missions, cuts dependence on fossil fuels and energy imports, and, the icing on the cake, creates jobs. Surely it must be the solution to many of the world’s biggest problems?

To see if these alleged benefits stand up to closer scrutiny, it is worth studying some rare longer-term figures from that shining example of a country with a successful wind-power policy: Germany.

Since the 1980s, wind energy has been promoted and subsidized by German governments, with wide political support. In 1991 all parties backed a law forcing utilites to buy electricity from wind-energy companies at 90 percent of the average retail price, making suppliers and therefore consumers pay for the growth of wind farms.

Building wind farms became popular among farmers seeking extra income from their pastures and among underused shipyards trying to diversify. Many schemes were in underdeveloped regions, so many local politicians backed them. Later, investors in wind energy could also deduct investments from taxes, making the deal attractive for high earners.

Incentives further improved with the Renewable Energies Act, of 2000. This removed the link to retail energy prices, which had fallen, thanks to liberalization of the electricity market, and replaced it with a guaranteed price of 0.091 euros per kilowatt hour for wind farms — a good three times the German average production cost of electricity, of 0.025 to 0.03 euros.

As a result, Germany produces around 3.1 percent of its electricity from wind energy, but this comes at the cost of an annual subsidy of around 4 billion euros (some $5 billion).

But what about the alleged benefits for the economy and the environment? It is often asserted that wind power has created some 45,000 jobs in Germany. But with a subsidy of 4 billion euros anyone can create jobs — although, at more than $100,000 per job per year, it would be cheaper to send these workers on permanent vacation to Hawaii.

The full picture, according to a 2004 study by Bremen University’s Energie Institut, is that wind farms actually lower employment, thanks to higher energy prices for the economy.

And as if the economic impact were not bad enough, it also seems that the ecological benefits of German wind energy exist only in the imagination of its supporters.

First, the wind in Germany is unsteady, so wind generators operate at full capacity for about 1,400 hours per year, on average — just over 58 days’ worth. Whatever the projections for the Nantucket Sound site, Britain, claiming better wind conditions than Germany, still only managed to reach a third of its wind-power capacity in the very windy year of 1998, according to its Department of Trade and Industry. Therefore, every wind turbine still needs full conventional-energy backup.

Secondly, even if wind power did decrease the amount of carbon emissions from conventional-electricity firms, those utilities could sell on those carbon savings to anyone else: “carbon-emission trading” gives companies an emission allowance and lets them buy or sell it, locally or internationally. A 2004 report for Germany’s Federal Ministry of Economics showed carbon reduction would be zero, at the considerable cost of higher energy prices.

Thirdly, another concealed environmental problem is carbon emissions from manufacturing turbines. The wind sector is now the second-biggest consumer of steel, after car makers, in Germany. At lower wind speeds you need more than 10 units of iron for a given output, compared with around two units for coal, one for gas, and half a unit for nuclear.

In fact, Germany’s wind-energy campaign has been extremely expensive and has probably destroyed jobs. Its ecological benefits under carbon trading are nonexistent, and it needs full conventional backup.

The German experience does not prove that wind energy can never be viable, but it does show that government interference with the market can create enormous economic and ecological distortions.

If wind energy really is the energy of the future, as the developers claim, it must prove itself in the market without government subsidies. This has not yet happened anywhere; the projections are all based on artificial models with hidden costs — costs for you and me, the taxpayers and consumers.

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