Wind Energy Industry Suffers Fuel Shortage in 2015

Wind energy can’t compete. Instead, it exists only by the grace of favorable politics. On the supply side, the industry enjoys the federal production tax credit, which awards tax equity to owners of wind power for each megawatt hour of generated electricity. On the demand side, the industry enjoys Soviet-style production quotas in 30 states that force ratepayers to use increasing amounts of wind power.

Yet even with all this political “wind” at its back, sometimes the industry nonetheless falls short—because nature won’t cooperate. According to James Osborne at Fuel Fix

Last year might have been a banner year for wind turbine construction, but not for the wind itself.

According to new data from the U.S. Energy Information Administration, the amount of electricity generated from wind turbines grew by less than 10 million megawatt hours last year, the smallest increase since 2007.

In a report Thursday government analysts attributed the slow down to decreased wind speeds across the western half of the United States during the first six months of 2015.

“The same weather patterns resulted in stronger winds in the central part of the country, where wind generation growth in 2015 was most pronounced,” the report read.

The fall off came even as wind energy capacity grew by its highest level in three years, as more than 8,000 megawatts worth of new turbines were installed on the grid, according to EIA.

To recap: Due to the wind not blowing, there was a paradox for the wind energy industry in 2015 whereby capacity installment was historically high, while generation was historically low. By my back-of-the-envelope calculation, the new wind power capacity operated 13 percent of the time in 2015, which is hardly the hallmark of reliability.

The lesson is that wind, though free, can suffer supply shortages, just like gas and coal. Add this to the industry’s other drawbacks, including:

  • High capital costs;
  • high operations and maintenance costs for the turbine and the grid; 
  • it’s intermittent and therefore requires backup generation; and
  • it’s non-dispatchable.

In late 2015, I wrote on this blog:

The American Wind Energy Association, which serves as wind power’s top lobbying shop, released a report warning that the industry would face a “sharp decline” in 2016, if the Congress does not extend the wind production tax credit by the end of 2015.

Given the precarious state of wind power in late 2015, when AWEA claimed that the industry would implode without a single subsidy, I was surprised by a recent boast by AWEA chief Tom Kiernan regarding his industry’s competitive health. In mid-April, Kiernan told The Washington Post:

We’re at a point of maturity in the wind industry that people are seeing the value in what we’re bringing to them. These corporations are buying because it’s affordable and it’s clean … This is a good business proposition for them.

Kiernan’s comments bring to mind a couple questions. Why, if wind power is a “good business proposition,” does it need a subsidy? How can wind power be a “good business proposition” if the industry would fall apart absent a single subsidy?