Texas and Europe don’t have a lot in common. But when it comes to government support for renewable energy, the Lone Star state has followed the same course as many European nations.
In the late 1990s, while the European Union was urging member nations to adopt targets for the percentage of their energy produced from renewable sources, Texas enacted a renewable portfolio standard (RPS) mandating that the state’s competitive electric providers buy a minimum 2,000 MW of qualifying renewable energy by 2009. The purchase mandate was part of a broad electricity restructuring bill sponsored by Enron Corp., parent of Enron Wind Corporation, a story detailed elsewhere at MasterResource.
The Texas Legislature, with the support of Governor Rick Perry, later increased the RPS to 10,000-MW by 2025. Texas met this target for installed wind capacity in 2010, a full fifteen years ahead of schedule. Subsequent attempts to increase the mandate, and to carve out a solar mandate, have been repulsed by a more free-market legislature.
Almost all of this renewable generating capacity comes from wind, and in particular from industrial wind parks in the rural West Texas. Texas is currently one of the world’s largest producers of wind energy, and home to the largest single wind facility in the world, the 781-MW Roscoe Industrial Wind Park.
Appendage Energy
In practice, Texas windpower offers much less energy than first appears. Texas’s wind farms are concentrated in the Texas Panhandle, far from the focus of the state’s electricity demand along the I-35 corridor. In addition, Texas wind tends to blow hardest at night and during off-peak (non-summer) months, when there is less overall demand absent air conditioning load.
For these reasons, the Electrical Reliability Council of Texas (ERCOT) estimates that actual net summertime generation for wind power in Texas is only around 8.7 percent of installed capacity. During electricity’s prime time, wind contributes a paltry one percent, according to ERCOT:
Summer generation by fuel type is 64.2 percent natural gas, 26 percent coal, 7 percent nuclear, 1.1 percent wind, and 0.7 percent hydro, 0.1 percent biomass, and 0.8 percent other (includes landfill gas and petroleum coke, and other fuels not specifically categorized, such as diesel).
So, aside from bragging rights, what has building so much wind capacity accomplished? Renewable supports are justified as a way of reducing carbon emissions while investing in a fashionable industry. In addition, however, supporters of these subsidies and mandates claim that they are a good way to create jobs.
But as I point out in my just-published paper, Learning from Others’ Mistakes: What Europe’s Experience with Renewable Mandates and Subsidies Can Teach Texas, government support for renewable energy has proven to be a poor method of creating “green” jobs both in Texas and abroad.
Spain’s Case Study
Consider the case of Spain. In 2007 the Spanish government agreed to binding targets to increase its share of final energy consumption derived from renewable energy to 20% by 2020. To achieve this ambitious target, Spain initiated substantial subsidies for the generation of wind and solar power. Under a pair of royal decrees issued in 2007 and 2008, solar electricity received between €310 and €340 per MWh, while wind electricity received up to €73.20 per MWh for the first 20 years of a plant’s life.
In terms of increasing installed capacity for renewable energy, Spain’s subsidies were a roaring success. By 2008, Spain accounted for half of the world’s new solar-power installations in terms of wattage.
Yet the effect of these subsidies on the job market was less stellar. A 2009 study by researchers at the Universidad Rey Juan Carlos found that creating “green jobs” was incredibly expensive. Between 2000 and 2009, Spain spent €571,138 to create each “green job,” including subsidies of more than €1 million per wind industry job.
The study concluded that for every job created by the subsidy program, 2.2 jobs where destroyed in other industries. This is because paying for subsidies requires siphoning off resources from the wider economy in the form of higher energy prices and taxes. According to the study, each “green” megawatt installed in Spain destroyed on average 5.28 jobs elsewhere in the economy: 8.99 for photovoltaics, 4.27 for wind energy, 5.05 for mini-hydro.
Other Country Studies
Similar studies examining renewable supports in Denmark, Germany, Italy, and the United Kingdom have reached the same conclusion. Itay’s Instituto Bruno Leoni found that “the same amount of capital that creates one job in the green sector would create 6.9 or 4.8 if invested in the industry or the economy in general, respectively.”
A study by Verso Economics on renewables in Scotland and the UK found that “for every job created in the UK in renewable energy, 3.7 jobs are lost.” A 2009 report by the Danish think tank the Center for Politiske Studier (CEPOS) found that in Denmark “a very optimistic ballpark estimate of net real job creation is 10%” of employment in the renewable sector.
And a 2009 paper by German economists Manuel Frondel, Nolan Ritter, Christopher M. Schmidt, and Colin Vance found that the country’s subsidies to renewable energy amounted to $240,000 (€175,000) per worker.
Given these results, it’s not surprising that these countries are beginning to backtrack. Italy, Germany, and the United Kingdom have all cut subsidies for solar and wind power over the last year, and last month Spain’s new center-right government announced that it would “temporarily suspend” all subsidies for new wind and solar generators.
EU-Like Texas Wind: Is A Scaleback Ahead?
Texas is not as far down the path Europe has traveled with respect to renewable energy. Many of the road marks, however, are the same. Along with mandating that utilities produce 10,000 MW of new renewable energy capacity (allotted according to each company’s share of the overall market), the state has set up a Renewable Energy Credit (REC) trading program. Under the program utilities are given one REC for each megawatt-hour of qualified renewable energy generated, which can be traded or sold to other utilities in order for them to meet the RPS requirements.
While not as pricey as some of the European schemes, Renewable Energy Credits for wind energy were estimated to cost around $54 million during 2011, with a cumulative cost of nearly $700 million over the coming decade, all of which will be passed on to consumers through the price of electricity.
Now underway, construction of 2000 miles of transmission lines from wind farms in sparely populated west Texas to major urban areas will cost consumers $7-10 billion, a cost totally socialized across rate-payers under Texas law.
At current prices, the REC system alone is estimated to cost between $26,373 and $43,956 per wind industry job created. And the cost of RECS is dwarfed by the price tag for federal renewable subsidies, which are projected to total $4.61 billion for the period 2011–2020.
Whether Texas will follow Europe in scaling back renewable supports remains to be seen. But the experience of both European nations and Texas itself has shown that supporting renewable energy is not a good mechanism for creating jobs.
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Josiah Neeley is an analyst with the Anne and Tobin Armstrong Center on Energy & the Environment at the Texas Public Policy Foundation. He holds a B.A. in Government and Philosophy from the University of Texas, and a J.D. from the Notre Dame Law School.
You may want to check your facts before you post next time. I won’t bother refuting the Carlos study from Spain since others have already comprehensively covered that:
http://switchboard.nrdc.org/blogs/paltman/credit_for_trying_spanish_stud.html
I will call you out for this blatantly false attack on wind, though:
“the Electrical Reliability Council of Texas (ERCOT) estimates that actual net generation for wind power in Texas is only around 8.7 percent of installed capacity.”
The net generation for wind power in Texas is actually over 30% of the installed capacity. See page 57 in the Department of Energy’s annual wind report:
http://eetd.lbl.gov/ea/emp/reports/lbnl-4820e.pdf
That’s why wind energy provided 8.5% of the massive amount of electricity generated in ERCOT last year, a remarkable accomplishment in reducing our dependence on fossil fuel energy:
http://www.ercot.com/news/press_releases/show/473
I assume a correction will be forthcoming?
Michael Goggin,
American Wind Energy Association
Isn’t it interesting how the subsidized “something for nothing” always costs so much more than the more expensive and economically sound “pay for it by the value of what you produce” kind of thing. That doesn’t seem to matter because they are spending other people’s money. They appear to think there is always more where that came from. That is until reality hits the fan and starts splattering the soft warm brown stuff all over the place.
In the final analysis, reality is real and action based upon wishful thinking doesn’t work all that well. Even in spite of it being backed by the gun of the government and the full “faith and credit” of We the People.
There is no such thing as a free lunch. They all will be paid for one way or another. The more you work to have the next guy pay for it, the more expensive it becomes for the thing you should value most: your freedom.
Michael:
If an NRDC study of an academic study is your idea of a refutation, then you can refute just about anything with a simple link. Would your organization like to host or cohost a panel on the Spanish study in the interest of good scholarship? Let’s get the best folks on both sides to evaluate both the study and what is going on in Spain regarding wind and solar subsidies.
Regarding the 8.7% figure, it was stated in the context of peak summertime demand. We added ‘summertime’ in the sentence to be clear.
Isn’t meeting peak demand what new capacity is all about anyway? Wind is about off-peak, surplus power that would not exist in the state except for the Enron mandate–does that make you proud? It does not make me proud. I worked at Enron and had to sit still while our lobbyists did the dirty work in Austin.
Windpower is more than a sham. It is energy policy at a point of a gun with government mandates–and special tax favors that dwarf other energy forms. We all deserve better.
Another blisteringly empty riposte by Michael Goggin, AWEA’s avatar of bunkum. Yes, wind woozled around 8% of the total generation in ERCOT last year. But there is not a shred of evidence that it “caused” an overall reduction in the state’s use of fossil fuels. Quite the contrary. There’s substantial evidence that more fossil fuel was used in consequence because of how wind’s woozling delivery imposed inefficiencies on its thermal plant prosthetics.
This PR weasel, who has long used half truths and outright misrepresentations to build a house of lies, would evidently, for a paycheck, also tell the public how much value they’d be getting from massive public subsidies for wind “powered” vacuum cleaners, or refrigerators, or ranges, or chainsaws–even wind mobiles–despite how those lemons would never work as desired when asked. But since his outfit is pushing electricity generation, something few know much about, he asks people to believe wind machines are very useful things. They’re anything but. Goggin’s version of making lemonade should disgust anyone interested in functional energy policy.
I share James Delingpole’s contempt, expressed thusly (http://tinyurl.com/7z78rav):
“Of all the miserable specimens on this planet, no category repels me quite so much as those parasites involved with the great renewables boondoggle. I’ve said before that I’d rather break bread with someone who manufactured land mines for his living than someone involved in rent-seeking from solar power or wind farms. At least with land mines a reasonable case could be made – despite their vile, random destructiveness – they offer some practical value for force protection. … [T]here is no argument for wind farms whatsoever: they’re just an emblem of the green religious faith, perhaps too a symbol of the environmental ideology’s geographical and political dominance, nothing more useful than that.
“I genuinely don’t understand how the people involved in this scam can sleep at night, really I don’t. But I do know what their punishment should be. They should be forced to spend the rest of their lives living in one of the many newly vacant properties at the foot of the nearest wind farm.”
Ditto for energy economists, who, like engineers pushing tree swing solutions, discuss wind’s cost and price without any knowledge of its utter lack of value as a source of modern power.
Good for Josiah Neeley for his efforts at communicating the extent of the scam in Texas, although he’s just scrapped the edge of the surface….
Sorry Michael, but it is still 1.1% for wind in Texas. I can sense your collar tightening, along with the others who nail the public for wind subsidies, as those subsidies are set to end this year. At that point the wind business goes as quiet as those turbine blades on one of those sultry summer days when all ACs run, and there isn’t a “breath of air”.
Sorry Michael, but it is still 1.1% for wind in Texas. I can sense your collar tightening, along with the others who nail the public for wind subsidies, as those subsidies are set to end this year. At that point the wind business goes as quiet as those turbine blades on one of those sultry summer days when all ACs run, and there isn’t a “breath of air”.
(I don’t see a duplicate)
“At least with land mines a reasonable case could be made – despite their vile, random destructiveness – they offer some practical value for force protection. …”
Tell that to the 10-year old Afghan boy whose legs have been blown off.
Your arguments were sound up to this point.
[…] Green News Source- Click to read full articleh204(); […]
James Close:
Although I understand your emotion response, I don’t think Delingpole even thought about minimizing the horror of land mines–hence, his term “vile,” with its denotations of horror and abomination. Saying that they had some functional value for “force protection” is also true, however, particularly if the awful things deter an invading army bent on death and destruction.
I used the quote because I think it’s high time people expressed deeply felt horror at the way wholly dysfunctional wind projects run roughshod over the landscape, often causing enormous physical harm.
Jame Close, you should consider the impact of wind turbines in the context of not only the enormous environmental damage they do to several bird and bat spp. that live around these machines, the health issues that relate to residing in close proximity to wind turbines, and the property devaluation of those unfortunate to be located close to these industrial parks.
All the while, the victims of this assault are forced to pay to the rent seeking owners of these windfarms the subsidies that go to lining their pockets for providing nothing but misery for those who have to endure their presence.
If you think about in in that context, then landmines are starting to look quite virtuous, and at least they have some honesty about them, which is more than you can say about the Great Green Wind scam that is being perpetrated in so many Western countries
Brilliant commentary, Charles, distilled to its essence. Thanks!
Wind Power:
15-35 c/ kWh intermittent annoyance interrupting reliable
5-6 c/kWh gas generation
That might save 2-3 c/kWh of natural gas.
[…] cannot accept an electrical supply system that is intermittent. See here, here, here, and here for more on the unreliability wind farms […]
[…] cannot accept an electrical supply system that is intermittent. See here, here, here, and here for more on the unreliability wind farms […]