Can wind power make a profit without government intervention? I often hear opponents say it is a “waste of taxpayer money”, despite the fact that it is usually built, maintained, and owned by businesses. Can wind power make a profit on its own, or does it need tax subsidies?
Most new techologies need government support and protection at the start. After a while you see if they are now self-sustaining. Like nursing seedlings.
Some succeed and make their own profitable way, such as the Internet; some like nuclear power or fighter planes stay on the teat forever ( but should still have continued support if adjudged vital ).
It’s arguable that all power sources have some amount of government subsidies, either in the form of tax breaks, below-market prices for mining on public lands, or ignored clean-up costs.
Also, when you are comparing with coal & gas, you should take into account that being allowed to emit CO2 into the atmosphere and not pay for the consequences is effectively a subsidy.
I can only laugh when people describe wind power as new. Tens of thousands of farms across the midwest had Winchargers in the early 1930s, if not a few years before that. While the giant wind towers now in use are far more sophisticated, there’s not a component in them - including high-efficiency generators, computerized generation control and carbon fiber - that didn’t exist in the 1970s.
Subsidies may be appropriate for one reason or another, but the claim that the technology is still being developed is almost entirely false.
Wind power has been around in Denmark since 1900; now it supplies over 42% of electric production.
However there was not a direct line of continuous generation: modern wind power is relatively recent, dating, except in the minds of green theorists *, from the 1980s. Which was when the Danes subsidized the hell out of wind power, in order to reach the generation they have now.
America, and many countries, will need to start from that subsidizing era to get as far as the Danes. Unless of course some better new power source is discovered in the mean time.
- Just as German professors theorised the modern world during the 18th/19th centuries, to reap consequence later.
The components being old does not necessarily imply that the system as a whole is old. Aluminum, steel, and carbon fiber are all old, but which material is the best choice for making each component? Bolts, rivets, and welding are all old, but which is the best way to join those components together? Numbers are positively ancient, but what’s the best number of blades? How long should the blades be, and tilted at what angle, and what’s the best balance between many small windmills and a few large ones? What shape should the blades be? Put all of these questions together, and it takes a while to find all the best answers, and as a result wind turbines are a lot more economical now than they were forty years ago.
And 2016 Toyotas are more sophisticated than 2010 models.
I’m simply pointing out that not one component of wind power is still subject to anything but refining research and development. It’s not fusion power, where key breakthroughs are still needed to make it anything but a lab curiosity. It’s not even fission power, where some significant development to make it safer and more reliable is called for. I’m not even sure it’s solar power, which is still waiting for a revolution in PE cell efficiency even though all the basics are decades old.
It’s a mature technology in all but some details. Arguing that it still needs development subsidies and accommodation is, IMHO, self-serving nonsense on the part of those implementing it.
Apparently, there’s still a dozen or so windmills in Holland built in the 16th Century … still standing too !!!
Solar power has been used to dry clothes since … well … since there’s been clothes to have to dry …
Turbines are increasing in size at an impressive rate. The techniques needed to produce larger units is sophisticated technology in and of itself, and not simply a matter of making everything bigger. The economics of wind power are strongly dependent on turbine size and aside from storage, is probably the single biggest factor in whether we can ultimately use wind for a large portion of generation needs.
Citing 1930s turbines with respect to modern wind power is just as absurd as bringing up 1900s electric cars in a discussion about modern electric cars. They simply have nothing to do with each other. The economics of any given technology is strongly dependent on the design details; you can’t handwave this away and pretend they’re the same thing.
To answer your question directly, wind power cannot currently operate profitably without government support, at least in the part of the world I’m familiar with (Western Europe). The lifetime cost of power from a wind turbine, including cost of finance, exceeds the current value of the power in Europe’s wholesale electricity markets.
This is because of low wholesale electricity prices, which in turn are a consequence partly of low fossil fuel prices, and partly (ironically) of increasing penetration of low-marginal-cost renewable sources, such as wind. In other words, wind power cannibalises its own profitability.
In fact, it remains to be seen whether electricity markets as currently designed can cope with very high penetration of low-marginal-cost generation, or whether subsidies will have to become a permanent feature (not just for wind).
Now, I see that the conversation has jumped straight to the question of whether wind should be subsidised, and the extent of implicit or explicit subsidies for fossil generation. That may make an interesting debate. But the GQ answer is no, at least not right now.
If we consider externalities such as greenhouse gas emissions as being equivalent to a subsidy, it’s worth pointing out that wind imposes very significant costs on the electricity system which are borne by the end user. These are:
- cost of extending and reinforcing the transmission system;
- cost of backup (dispatchable generation or storage);
- cost of inefficient operation of thermal plant to balance intermittent generation;
- cost of system services (wind doesn’t provide inertia).
None of this is to criticise wind power or to say we shouldn’t have it, but if you are looking at costs and subsidies it’s important to recognise that the full cost (“total system cost”) of a MWh of wind exceeds the feed-in tariff or premium price paid to the generator.
Assume to begin with ‘economics’ doesn’t include a price for carbon emissions. That’s not to say the right price charged per ton of carbon emission is zero, but at the other extreme if you simply set the price of carbon to where fossil fuels can’t compete with a given alternative, the question becomes rather circular.
I think the short answer is that at current state of the art windmills are competitive with fossil fuels for electricity generation even without a price on carbon, tax credits, renewable mandates etc. in some relatively small overlap of more expensive fossil fuel methods v quite windy places, where the windmills are providing a fairly small % of total. In general they rely on subsidies bigger than fossil fuels get (again ex-carbon price), there isn’t much prospect that would change in places where fossil fuels are cheap (eg. natural gas is a lot more expensive in Europe than the US generally speaking), and it’s not at all economical now to run a grid on a large % of intermittent renewables (wind or solar) once you factor in the cost of storage and/or charge the cost of (eventual) new standby fossil plants built just to pick up the load when the renewables aren’t producing enough.
Cutting CO2 emissions costs a lot of money with current technology, weighed against the benefits of the lower emissions in the future. Political style pitches which try to say it could be done relatively painlessly (subsidies are just nurturing seeds, ‘fossil subsidies are just as big’ [no they aren’t], ‘somebody else will really pay not you, voter’) are BS, basically. But if the need to cut is shown great enough, then a high cost must be accepted. Also, it’s impossible to predict what future technology could allow and when (including direct climate engineering).
Oh, certainly wind is a relatively mature technology, much more so than solar or nuclear. But that doesn’t mean that there’s no development at all in it. And even if it shouldn’t have subsidies for purposes of development doesn’t mean it shouldn’t have subsidies at all.
The price doesn’t have to be set at all. Cap-and-trade systems set a quota and lets the market figure out the price. Power generation will have to compete with other sources (transportation, industry, etc.) and the price will reflect that. Industries that get a lot of value from their emissions can pay more for the credits; this will force low-value players (coal plants, say) to reduce emissions.
The goal shouldn’t be to put anyone in particular out of business, but rather to reduce total emissions to something sustainable, and to get maximum economic advantage from those emissions that are allowed.
No, they don’t. Most technologies have started, and continued, just fine without any government intervention at all. All it takes is someone to make it, and someone to buy it.
If no one wants to buy it, but for some reason there are people who still think it should be produced, then some people might discuss government subsidies for that specific technology. And some small percent of those technologies might actually end up being subsidized by the government. It definitely isn’t “most”, and it definitely isn’t “need”.
An argument can be made that it is desirable for some large scale technologies which have a society-wide impact. Especially when they are competing against technology (like coal and oil) which is “subsidized” by foisting the costs of pollution onto society as a whole instead of the polluting companies paying for it themselves. But again, that’s hardly “most”.
In a cap and trade system the price is still set, just indirectly by the level at which you set the quota. My statement wasn’t limited to setting an absolute $ price by fiat, but applies to cap and trade just as much. Many existing C and T arrangements have had quota’s set where the carbon price ended up very low. If so, absent separate mandates and subsidies (though there usually are separate mandates and subsidies) wind mills can’t compete with fossil plants except as I said in some limited combination of windy, small % contribution by wind, and expensive fossil fuel. If OTOH you set the quota low enough, the C&T carbon price will spike, and you can make anything competitive with fossil.
I don’t think bringing up C&T changes the basic point, and one would hope there isn’t an illusion that C&T, because it’s a quasi market mechanism, means it wouldn’t be frightfully expensive to greatly reduce CO2 emissions with current technology, which unfortunately it would be.
Everyone admits that it’ll be very expensive to reduce carbon emissions. But the catch is that it’s even more expensive to not reduce emissions.
You’re ignoring demand. The carbon price in CA is about as low as it’s been in the past several years; this isn’t because they bumped up the quota. CA’s economy is doing fine, so it’s not a general demand contraction, either. It’s because emissions are simply worth less for whatever reason; I couldn’t detail the exact reasons but decreased costs of clean energy and general efficiency increases surely played a part.
As a side-note, I see a bunch of articles about a CA carbon auction failing to generate much revenue, and calling the system a failure. This seems utterly bizarre to me; maybe it was sold as a way of raising funds but that seems like only a side effect. The primary aim is reducing emissions over time, and it appears to be succeeding at that.
Anyway, as Chronos notes, the only thing more expensive than reducing emissions is not reducing them.
(I actually don’t think it’ll be very expensive in the long run. Wind+solar+storage will get very cheap not too long from now.)
One way Oregon subsidies her wind farms is by outlawing coal-fired electricity … however, Oregon is fortunate in that we have an extensive hydro-electric production where it’s also very windy … so a very minimal cost to hook up the turbines to the grid …