Wind Power Sending Power Prices Through the Roof


The wind industry in Australia is still reeling at the RET Review Panel’s recommendation to prevent any more wind farms being built by closing off the ability of “new entrants” to participate in the Large-Scale Renewable Energy Target (LRET) (see our post here).

In response, the wind industry and its parasites have been frantically trying to salvage the RET – bombarding the Senate cross-benchers with propaganda and irritating members of the Coalition – especially Tony Abbott.

One falsehood being pedalled is their pitch that wind power is lowering retail power prices (see our post here).

The falling power price furphy must come straight from the same “play-book” used by the wind industry the World over – because it seems to pop up everywhere lately. Trouble is – it’s a complete fiction.

The places where giant fans have sprouted like mushrooms have all seen retail power prices skyrocket faster than those without.

Denmark, with more turbines per capita than anywhere in the world has seen power bills triple in the past 20 years. Germans – who have slung up thousands of giant fans in the last decade or so – have been belted with power bills that have increased by more than 80% since 2000. And Australia’s “wind power capital”, South Australia jockeys with Denmark and Germany for the “honour” of having the highest power prices in the World (see page 11 of this paper: FINAL-INTERNATIONAL-PRICE-COMPARISON-FOR-PUBLIC-RELEASE-19-MARCH-2012 – the figures are from 2011 and SA has seen prices jump substantially since then).

And it’s not just South Australians, the Danes and the Germans facing escalating power bills thanks to wind power. In the USA a number of States have been madly slinging up giant fans – with the inevitable consequence of spiralling electricity prices. Funny about that.

A little while back we covered a report by James Taylor on how those states in the US that have seen increases in wind power capacity are being belted by phenomenal power price increases – way above the National average (see our post here).

James is back with a piece that revisits the topic and brings the figures up to date – slamming wind industry claims about wind power reducing power prices; and creating millions of “green” jobs.

Electricity Prices Soaring In Top Wind Power States
James Taylor
17 October 2014

Electricity prices are soaring in states generating the most wind power, U.S. Energy Information Administration data show. Although U.S. electricity prices rose less than 3 percent from 2008-2013, the 10 states with the highest percentage of wind power generation experienced average electricity price increases of more than 20 percent.

According to the U.S. Energy Information Administration (EIA), the 10 states in which wind power accounts for the highest percentage of the state’s electricity generation are:

Iowa – 27%
South Dakota – 26%
Kansas – 19%
Idaho – 16%
Minnesota – 16%
North Dakota – 16%
Oklahoma – 15%
Colorado – 14%
Oregon – 12%
Wyoming – 8%

The wind power industry claims switching from conventional power to wind power will save consumers money and spur the economy. However, data from the top 10 wind power states show just the opposite. From 2008-2013 electricity prices rose an average of 20.7 percent in the top 10 wind power states, which is seven-fold higher than the national electricity price increase of merely 2.8 percent.

The 2008-2013 price increases in the top 10 wind power states were:

Iowa – 16%
South Dakota – 25%
Kansas – 26%
Idaho – 34%
Minnesota – 22%
North Dakota – 23%
Oklahoma – -2%
Colorado – 14%
Oregon – 16%
Wyoming – 33%

With the sole exception of Oklahoma, every one of the top 10 wind power states saw its electricity prices rise at least 14 percent. For each of these states, electricity prices rose at least five times faster than the national average.

The electricity price increases in states producing the most wind power don’t tell the whole story. Federal and state taxpayer subsidies to wind power producers hide additional costs of wind power. The federal wind power Production Tax Credit (PTC), for example, gave wind power producers 2.3 cents for every kilowatt hour of wind power production last year. With U.S. retail electricity prices at 10.08 cents per kilowatt hour, the PTC allowed wind power producers to hide over 20 percent of wind power costs. This allowed the wind power industry to charge the American people still more money in backdoor tax bills, in addition to the higher retail electricity prices documented above.

Higher electricity prices in states producing the most wind power are taking a devastating toll on disposable incomes and the overall economy.

In Colorado, for example, electricity consumers spent $5.3 billion on electricity in 2013. Had Colorado electricity prices risen at merely the national average from 2008-2013, however, Colorado electricity consumers would have spent only $4.8 billion on electricity. That’s $500 million in excess electricity costs in 2013. If we divide that up among Colorado’s 2 million households, the extra electricity costs drained $250 from the average Colorado household in 2013.

In Minnesota, electricity consumers spent $6.4 billion on electricity in 2013. Had Minnesota electricity prices risen at merely the national average from 2008-2013, however, Minnesota electricity consumers would have spent only $5.4 billion on electricity. That’s $1 billion in excess electricity costs in 2013. If we divide that up among Minnesota’s 2.1 million households, the extra electricity costs drained $476 from the average Minnesota household in 2013.

In Kansas, electricity consumers spent $3.8 billion on electricity in 2013. Had Kansas electricity prices risen at merely the national average from 2008-2013, however, Kansas electricity consumers would have spent only $3.1 billion on electricity. That’s $700 million in excess electricity costs in 2013. If we divide that up among Kansas’ 1.1 million households, the extra electricity costs drained $636 from the average Kansas household in 2013.

The wind power industry’s fallback position is wind power benefits state economies, despite rapidly rising electricity costs, because the switch from conventional power to wind power generates jobs within the wind power industry. This argument, however, amounts to nothing more than a misleading head-fake. Shifting electricity production from conventional power to wind power does not create any net new jobs – it merely shifts jobs from one sector (conventional power) to another sector (wind power). Jobs created in the wind power industry come at the price of eliminating jobs in the conventional power industry.

Worse yet, the jobs shifted to the wind power industry fail to equal the number of jobs eliminated in other sectors of the economy for two important reasons.

First, wind power employs very few workers. After the tremendous start-up costs necessary to build wind turbines and place them in industrial wind farms, operational wind power facilities employ few workers. Nor does wind turbine manufacturing adds many jobs in top wind power states. Of the world’s top 10 wind turbine manufacturers, only one is located in the United States. Wind turbine manufacturing jobs are created in places like Germany, Denmark, and China more than in the United States.

Even among the top seven manufacturers of the wind turbines that are deployed in the United States, only one is located in the United States.

By contrast, conventional power plant operation requires far more workers than wind farms. More jobs are created in the conventional power industry even while electricity production costs go down. And unlike wind power jobs, nearly all U.S. conventional power plant manufacturing and operational jobs go to American workers – and especially to workers within the resident state of the conventional power plant.

Second, higher electricity prices caused by wind power kill jobs throughout the entire state and national economy. For example, when the average household in Kansas spends an extra $636 on electricity each year due to unnecessarily high electricity prices, that means the average Kansas household spends $636 less on other goods and services. The aggregate effect of such reduced spending in the Kansas economy (equaling $700 million in Kansas economy-wide reduced spending in 2013) eliminates thousands of jobs that would otherwise be created or sustained throughout all segments of the Kansas economy with higher consumer spending.

Any way you cut it, wind power is needlessly raising living costs, reducing living standards, and destroying American jobs. Fortunately, states can easily rectify the problem by repealing renewable power mandates and taxpayer subsidies that perpetuate higher electricity costs and widespread job destruction.

Jame’s brilliant analysis applies with equal force in Australia. The LRET has cost Australian power consumers around $9 billion so far; and will cost a further $50 billion between now and 2031, when the scheme (or, rather scam) expires (see our post here).

STT hears that the Coalition – alive to this brewing political disaster – is muscling up in an effort to do a deal with Labor that would see the price of Renewable Energy Certificates – the life-blood of the wind industry – plummet.

The main ingredients of the deal being proposed are that the current LRET target of 41,000 GWh (set to run annually from 2020 to 2031) would become a “true” 20% target, relating to actual demand in 2020 – which will end up somewhere between 23,000 and 26,000 GWh.

Where, in 2010, the RET was split into the Small-Scale Renewable Scheme (SRES) and Large-Scale RET (LRET) the plan is to bring both under the same roof, so that the certificates issued under the SRES (STCs) would be used by retailers to satisfy the LRET.

The new (reduced) LRET target would bring into account behind the meter solar: meaning power generated by rooftop solar, heat pumps and solar hot water systems – power used up by households, not being fed into the grid and not currently included in the SRES target (behind the meter solar is currently producing around 1,000-2,000 GWh annually). More generally, rooftop solar fed to the grid (currently producing around 7,000 GWh annually) would be also included in the LRET. All of this would be included – taking domestic solar’s total contribution to the target to around 9,000 GWh annually – and go towards satisfying the reduced LRET target.

Then there’s “old” hydro: hydro generation capacity built before 1998, which is excluded from the LRET; meaning the operators do not receive RECs at all.

Clive and his PUPettes, take note - there are cheaper ways of abating carbon and saving job.

On the LRET, Tasmania’s PUP – Jacqui Lambie
– is less mellow than yellow; she’s justifiably angry.

This stands as a travesty for Tasmanians – like PUP Senator Jacqui Lambie, who rails at the fact that – despite almost 100% of its power coming from hydro – because 95% of it is “old” hydro – only 5% is eligible to receive RECs. As a result, Tasmanian retailers will have to purchase millions of RECs from wind power outfits on the mainland or, otherwise, be whacked with the $65 per MWh shortfall charge – both of which will be added to Tasmanian retail power bills. Seems unfair, but that’s the LRET.

STT hears Jacqui is pulling out all stops to see that Tasmania’s “old” hydro gets included in the LRET, with RECs going to Tasmanian hydro generators (for a taste of Jacqui’s fury, see her press release here). In that event, Tasmania would satisfy the target in an eye-blink.

Which leads to a bigger question as to why – so far – “old” hydro hasn’t been included in the LRET?

STT hears that hydro is back on the Coalition’s LRET radar – with the announcement that some 27 dams have been slated for construction, expansion or upgrading all over the Country. A number of these have hydro generation potential, including the Apsley dam in NSW – the Nullinga dam; and the Burdekin Falls dam expansion in QLD – and the Wellington dam in WA.

Any new hydro capacity would be entitled to participate in the LRET and receive RECs.

If the Coalition can’t get any changes to the LRET target through the Senate, the current target will stand and it will not be satisfied; which leads back to the treatment of “old” hydro under the LRET.

With Tony Abbott making no secret of his desire to scrap the RET outright, NO retailer is going to sign a Power Purchase Agreement with a wind power outfit; and, without a PPA, hopeful developers will never get the finance needed to construct any new wind farms.

This means that – in a few short years – as the annual target for the LRET starts to rocket towards its ultimate 41,000 GWh target – power prices will skyrocket under the weight of the shortfall charge – simply because there will be a shortfall in renewable energy production of around 18,000 GWh (see our post here).

Whichever side is in charge of the Federal government at the time the target starts to bite (around 2017), it will be pilloried for setting up the addition of some $15 billion to power consumers’ bills by way of the shortfall charge levied on retailers – but doing so with: NO additional renewable energy; NO “break-through” on-demand renewable energy technologies; and NO reduction in CO2 emissions.

With that political time-bomb already ticking, the need to avoid the LRET simply turning into a great big toxic tax on all power consumers is starting to sharpen the focus of Coalition MPs.

With political suicide looming on the not-too-distant horizon, the temptation to satisfy the escalating (current) annual target set by the LRET by including “old” hydro will become irresistible.

By bringing in “old” hydro now, the Coalition would avoid the imposition of the shortfall charge altogether; would “flood” the REC market, causing REC prices to crash; and with a REC price anything less than $40, would choke off any further investment in wind power.

And the Coalition would make a life-long friend in Jacqui Lambie, whose Senate vote is one that they need to pick up whenever the Greens-Labor Senators unite to block legislation passing the upper house.

STT thinks that if Tony Abbott doesn’t get his wish of scrapping the LRET outright, the Coalition will be left with no choice but to bring “old” hydro under the LRET. In that event, the current target will be satisfied in a heartbeat; the REC price would plummet; and the wind industry would grind to a halt.

In the longer term, the RECs issued under the SRES and LRET are lined up to be amalgamated with Carbon Credits Units issued under the Coalition’s Direct Action policy – with the price of credits likely to trade around $8-10 (see our post here) – or, if Clive Palmer has his way, the CCUs will be priced at exactly ZERO (see our post here).

STT thinks that, whichever way you slice it, the wind industry is in for an old fashioned Snowy Scheme soaking.

snowy hydro

Killing the wind industry is as simple as including “old” hydro in the LRET.

About stopthesethings

We are a group of citizens concerned about the rapid spread of industrial wind power generation installations across Australia.

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