Traverse City Record-Eagle

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April 4, 2012

Forum: Wind power not cost competitive

Has anyone noticed how the wind industry is trying to make the case that wind power is now cost competitive with conventional generating facilities?

Well, as the plant manager of a large northern Michigan manufacturing facility I've certainly noticed. In fact I'm concerned that if this myth becomes accepted as reality it will make it difficult for large employers like mine to remain competitive.

Proponents of wind are primarily focusing on two numbers.

The first is contract pricing of 6.1 cents per kWh for a recently proposed wind farm and the second is a 13.3-cent-per-kWh estimated cost of a new coal-fired plant. While at first glance these numbers would seem to indicate an advantage for wind, let me assure you they don't tell the full story.

First, the cost quoted for wind is only possible due to the extensive subsidies available from the federal government's stimulus spending and the state's bonus credit system. These include direct cash payments to the developer of 30 percent of the cost of the project, accelerated depreciation and bonus credits for up to 40 percent of the power generated.

Without these subsidies the cost of wind power rises to around 11.5 cents and when you add in the billions that will need to be spent for new transmission equipment the cost for wind rises to more than 13.5 cents.

Second, the cost presented for a new coal plant is grossly inflated. The 13.3-cent figure for coal includes a carbon tax and carbon capture, neither of which currently exists. The real cost of power from a new conventional coal plant is around 7.5 cents. In fact the current marginal cost of power from our existing generating facilities is approximately 3 cents.

Replacing 3-cent power with 13.5 cent wind power makes no economic sense and will make Michigan manufacturers less competitive.

The bigger point however, is that it is just plain wrong to compare wind to conventional power because wind adds virtually nothing to our generating capacity and is not capable of producing power on demand. In fact the intermittent nature of wind lowers the reliability of our power supply and requires us to run our least efficient conventional facilities as backup.

Wind also does very little to reduce coal consumption. For the most part wind displaces power from natural gas, not coal, thereby greatly reducing any potential positive environmental impacts.

In effect all the money spent on wind is wasted. Who foots the bill for this waste? You guessed it — you, me and employers like mine.

Let's ask ourselves — if wind is cost competitive and a viable substitute for conventional generation why does it need unprecedented subsidies and why is the cost of compliance with the state's renewable energy mandate estimated to exceed $11 billion?

About the author: Kurt Krueger has a B.S. in chemical engineering, an MBA, 30 years of manufacturing experience and has done extensive research into the costs of wind power. He is the plant manager of Martin Marietta Magnesia Specialties in Manistee.

About the forum: The forum is a periodic column of opinion written by Record-Eagle readers in their areas of interest or expertise. Submissions of 500 words or less may be made by e-mailing letters@record-eagle.com. Please include biographical information and a photo.

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