Reference no: EM133315684

The Debate over Wind Power

While wind power via sailboats and windmills has been harnessed for ages, "wind power" in this case refers to the modern use of wind to turn turbines to generate electricity. As a new darling among environmentalists, wind power has become a popular renewable energy source in the 21st century.

The first windmill used to produce electricity was built in Scotland in 1887 (not a typo for 1987). However, modern wind power only came of age in the 1990s, when the efficiency of wind turbines increased and the cost decreased significantly. To effectively compete with established fossil-fuel energy (oil, coal, and natural gas-in this order of importance worldwide), wind power has been heavily subsidized by numerous governments. At present, wind power supplies 7% of the world's electricity with approximately 600 gigawatts (GW) of installed capacity. China, the United States, and Germany have the world's largest installed capacity-in this order. In the European Union, wind power provides 15% of the electricity consumed, led by Denmark (48%), Ireland (36%), and Germany (26%).

Despite its bright future, wind power has no shortage of controversies, revealing a great deal of inconvenient truth. The first controversy is that many individuals, who may be genuine environmentalists, do not like wind turbines in their backyard, citing aesthetics and noise reasons. With dozens or hundreds of turbines, wind farms can indeed have a significant visual impact on the landscape. As incentives, wind turbine operators typically offer US landowners $3,000-5,000 annually per turbine, while farmers and ranchers can continue to grow crops or graze cattle within a foot of the turbines. In addition, some birds are accidentally killed, causing an uproar among bird watchers. Furthermore, the inevitable noise makes it not practical to have turbines in urban areas. One solution is to construct turbines in remote areas. Another solution is to move wind power offshore.

Moving wind power offshore creates a second controversy: cost. The rigors of the sea make offshore wind turbines depreciate much faster. Maintenance has to be provided by high-flying (and high-cost) helicopter-borne crews. Under-sea transmission lines are needed to bring electricity to land. As a result, the cost of offshore wind power is about three times that of onshore wind power. The global average is approximately $4,240 per kW offshore versus $1,500 per kW onshore.

Perhaps the biggest controversy is the "dirty secret of clean energy." It is widely accepted that wind power-especially during its initial stage-must rely on government subsidies. Since 2008, $800 billion in subsidies have been lavished on wind power worldwide. The goal is to displace dirty and unsustainable fossil fuels. However, the more successful wind power becomes, the more subsidies that fossil-fuel utilities will demand. This seemingly counterintuitive connection is due to the physics, politics, and economics of wind power.

The physics of wind power is clear: power is intermittent. No wind, no power. In Texas (the number-one electricity-producing state in the United States), wind power is the second-largest energy source, normally contributing 25% of electricity-one-third of total US wind energy. However, during February 2021 when temperatures dropped to a record-breaking , wind turbines froze, resulting in 13% of the massive outage. While more outage was caused by failures of gas-powered plants (Texas's number-one energy source, normally providing 52% of electricity), the unprecedented freeze makes it clear that wind power needs to be supplemented by conventional fossil-fuel sources.
The politics in the name of encouraging more sustainable energy dictates that per government decrees, utilities must accept into the grid whatever electricity that wind power generates and pay for it at "fair" prices, regardless of how saturated the market for electricity becomes. In developed economies, growing energy efficiency (before the rise of wind power), the financial crisis during 2008-2009, and the drastically curtailed economic activity during the 2020-2021 COVID-19 means that electricity consumption is stagnating. The upshot of forcing a glut of wind-power capacity on electricity systems that have no need for new capacity? Utilities suffer from reduced revenues and decreasing returns-thanks to such market distortion dictated by politics.
The economics of wind power means that it is super cheap. Since wind is free, its running cost is (theoretically) zero, and its "high cost" is due to R&D, construction, and maintenance. In comparison, fossil-fuel energy plants are a lot more costly to construct and run. As always, expensive products cannot compete with low-cost (or free) equivalent products. When wind power reaches a certain percentage of all electricity produced, price collapse is guaranteed. In response, rational utilities, which cannot say no to wind-generated electricity, have strong incentive to reduce their fossil-fuel capacity or simply shut it down, and investors have diminishing incentive to finance new fossil-fuel plants.

In summary, the advantages of wind power are paradoxically its disadvantages. Governments in countries with a lot of wind power end up having to bribe fossil-fuel utilities to stay in business. Such subsidies are known as capacity payments for fossil-fuel plants that otherwise would become uneconomic. This is a dirty secret of clean energy of which many advocates of clean energy are not aware. As another form of sustainable clean energy, solar power has similarly generated demand for subsidies to support dirty fuel. As governments worldwide struggle with shrinking post-COVID revenues and budgets, can they afford to subsidize both clean energy and dirty energy? The debate will rage on.

Question: Why is wind power such a popular source of sustainable energy?