March 04, 2010
Competitors Complain About Wind Unreliability Subsidy

An article in the Wall Street Journal reports on the debate within the electric power industry about whether it is fair for wind power generators to avoid paying a cost for the lower dependability of wind.

One grievance: Coal, nuclear and gas operators must pay for their own backup if an operational or maintenance problem prevents them from delivering power as promised. But if wind generators fail to deliver promised power because the wind doesn’t blow, the cost of backing up wind power companies is spread among all the generators, state officials say. This puts an unfair burden on nonwind generators, says the gas faction.

In the United States this amounts to a subsidy of wind electric power that comes on top of the Production Tax Credit and other incentives for wind. However, one could argue in turn that coal burners especially get a subsidy in the form of external costs imposed on the public at large by oxides of nitrogen, mercury, particulates, and other pollutants. But that argument doesn't apply to nuclear power. Why should wind get subsidies that put nuclear power at a competitive disadvantage?

Michael Giberson says the the debate within the electric power industry shows signs of the high stakes involved.

For a closer look at the behind-the-scenes battle, try searching the ERCOT website for information about “voltage ride through” requirements for wind generators or the actions of (and reactions to) the Wind Cost Allocation Task Force.  If you drill down beyond the meeting schedules and status reports, all the way down to the presentations, reports, and comments filed by individual parties, things can get a little sharp.

As wind's percentage of total electric power grows two things will make the debate over this issue even more intense:

  • A larger percentage of total electric power will be undependable.
  • A smaller percentage of total electric power generators will pay for providing replacements when generation sources fail

Both these trends mean that nuclear, coal, and natural gas plant operators will have to pay more money to fund back-up generators that swing into action when the wind stops blowing.

Share |      Randall Parker, 2010 March 04 10:32 PM  Energy Wind

Jake said at March 5, 2010 1:32 AM:

In Germany, the coal backup plants needed for wind generators, burned more energy than was created by the wind. Thus wind generation was a net pollution creator.

James Bowery said at March 5, 2010 7:47 AM:

Synthesize ammonia and pipe it out of the wind farms. Wind ammonia synthesis plants aren't capital intensive so you're not suffering that much from opportunity costs when the wind doesn't blow. Of course, you're left with the problem of how to prevent fixed nitrogen run-off and N2O evolution, but those are problems anyway.

not anon or anonymous said at March 5, 2010 8:17 AM:

Both these trends mean that nuclear, coal, and natural gas plant operators will have to pay more money to fund back-up generators that swing into action when the wind stops blowing.

My understanding is that electricity is automatically traded in spot- or very short-term markets (minutes or hours). So while it's true that other power plants will have to fund more back-up generation, they will be no worse off since they'll receive higher prices for back-up power. Moreover, industrial power users will also face these higher prices and shed their load if possible, so the amount of back-up power which is needed may in fact be reduced.

JAY said at March 5, 2010 8:18 AM:

The argument for wind power rests on the AGW theory. AGW is being disproved every day. It is time to stop these foolish subsidies.

Fat Man said at March 5, 2010 10:14 AM:

Wind Power and the Grid by Carl from Chicago on March 2nd, 2010

“Wind in a way is “free riding” on the grid; wind is paid as if it is reliable, when in fact it isn’t, and then the other electricity providers de-facto subsidize wind (again, they already receive Federal and State subsidies) by not charging them for failing to deliver AND taking on their pro-rata share of the power needed when the wind farms don’t deliver.

“Not only does wind power get a “free ride” on backup capacity, which hurts the gas generators, but the gas generators that DO run are also getting a lower per-unit reimbursement because the revenues are set based upon the highest “marginal” cost for electricity; on a given day when there is more wind only nuclear, coal and the most efficient gas plants will be online (along with the wind, which always is in the stack, depending on weather conditions) if there isn’t much demand, so not only do gas plants lose money from NOT being on but the gas plants that ARE on receive a lower price for their power. This concept wasn’t really touched upon in the WSJ article (it was better than most of their articles, but still had some holes).

“This article is key to an understanding of wind’s impact on the grid; either wind operators should need to estimate their available power more cautiously (to ensure that they meet their commitments), or they should pay to have alternate power (in some reliable form, like natural gas) online.”

Randall Parker said at March 5, 2010 7:14 PM:


A very small number of climate scientists used bad judgment, made mistakes, or did shoddy work. That does not say anything about the work of a far larger group of climate scientists.

Fat Man,

In a nutshell: Wind's real value is less than the price it gets in the current market. Currently it gets special treatment that allows it to be sold for more than its lower level of reliability justifies.

An argument I never see mentioned (except by myself): Wind supplies power that would otherwise be supplied by baseload generators. That reduces the financial viability of other baseload generators. Therefore more peaking capacity gets built and less baseload capacity gets built. As a consequence, more natural gas gets burned by relatively less efficient peaking generators. This increases the amount of natural gas burned per kwh generated. So wind's displacement of natural gas electric power does not reduce natural gas demand by as much as it reduces natural gas electric power demand.

Engineer-Poet said at March 5, 2010 10:46 PM:

Fat Man, that is exactly what Jerome Guillet says is the advantage of wind:  it lowers the market price of electricity by more than the necessary feed-in tariff, so it's a net benefit to the consumer.

JAY said at March 6, 2010 6:17 AM:

Randall, The "very small number" seems to include every "scientist" who helped prepare the IPCC report. AGW is junk science. There are no verifiable results. There is no underlying data. There is no serious science.

Randall Parker said at March 6, 2010 10:12 AM:


The last IPCC report was 3000 pages with lots of different sections done by different groups of scientists. Since just a few places in the report are obviously wrong and shoddy I fail to see how the authors of all those other sections are somehow in ill repute.

Have you never worked on pieces of large reports or large proposals? I've done it and I do not see my own reputation as at stake if another section written by people with other types of expertise has problems in it.

No serious science: How would you know? Have you read the scientific papers that the report references? Better put aside a few years of time to do that reading (after first doing some grad school work to pick up the needed knowledge to understand the papers) because it is a very large body of research done by thousands or tens of thousands of researchers around the world.

Randall Parker said at March 6, 2010 10:17 AM:


What is the real argument for why wind reduces the price of other electric power sources? I can see the argument that wind avoids the need for newer coal/natural gas generation plants that cost more than existing plants. But is that even true?

I can certainly see an argument for why wind raises, on average, the cost of other power sources: With a large portion of wind in the mix the need for fast spin-up standby generators grows. They have higher cost per kwh than baseload coal, natural gas, and nuclear plants.

In fact, a large portion of wind reduces the potential for nukes to displace fossil fuel-based base load generators because nukes only make sense when run 24x7. Wind reduces the percentage of total power that can be delivered from 24x7 plants. So the net benefit of wind in terms of marginal cost of electric power is not clear to me.

Randall Parker said at March 6, 2010 10:36 AM:


A recent NY Times article about FPL's hybrid solar-natural gas generating plant in Florida has an interesting couple of facts about peaking power plants.

About 20 percent of the generation capacity overseen by PJM Interconnection, a regional transmission operator covering 13 northeastern and mid-Atlantic states, is used less than 100 hours a year, according to Lester B. Lave, a professor of economics at Carnegie Mellon’s school of business.

“As long as the contribution of wind and solar is very small, utilities can handle it very well,” Mr. Lave said. But what happens once the share of renewable power rises to 10 percent? Or 20 percent? “No one knows what the magic number is.”

Those plants used less than 100 hours per year are probably very inefficient. More wind will cause those plants to be run more and for more plants like them to be built. Look at how fast wind power generation can drop over a fairly large area:

Spain, which generates more than 12 percent of its electricity from wind, has struggled with wind variability, Mr. Lave said. Similar problems are also cropping up in the United States, especially in states where solar and wind power are on the rise. In 2008, for example, Texas narrowly avoided a blackout when wind power, which supplied 5 percent of demand at the time, experienced an unexpected lull, driving wind electricity generation down to 350 megawatts, from 2,000 megawatts, in less than four hours, according to Mr. Lave.

I'd like to know more about how much wind can drop over large areas. Can the entire US plains experience a low wind condition from North Dakota to Texas?

Integrating solar concentrators with natural gas and coal fired plants could solve this intermittency problem much better than it can ever be solved for wind.

Brian said at March 6, 2010 6:57 PM:

Don't forget hydro, many northern states have very significant hydro capacity that compliments less predictable renewables nicely. I also see a benefit to natural gas produces if we can tune the system to compensate them appropriately. This is a scenario where our regulations are probably getting in the way.

th said at March 7, 2010 6:15 AM:

"Niels Gram of the Danish Federation of Industries says, “windmills are a mistake and economically make no sense.” Aase Madsen , the Chair of Energy Policy in the Danish Parliament, calls it “a terribly expensive disaster.”

Slow progress is showing up even in the minds of those responsible for this subsidy-driven, ill advised, affimative-action energy experiment. While rationalizing away from the real cause of its demise, spiegel now sees green garbage for what it is.,1518,606763,00.html

Anonyq said at March 12, 2010 6:49 PM:

2,000 - 350 = 1650MW

That is slight more than an average nuclear plant which can go offline in an instant and that does happen regular.

ps. The signaling in the wind system outside of the solar radiation happens with the speed of sound. The solar radiation effect is highly predictable. So over large areas wind energy only ramps up and down slowly

Mirco said at March 13, 2010 5:49 AM:

1) Wind plants could be coupled with hydro plants. When they produce surplus energy, the hydro plant pump water up or reduce the water allowed to flow down. When the wind slow down, the hydros stop pumping water up and start let it flow down and generate energy. We do this with nuclear power in Italy. We buy energy from Nuclear Powers plants in France at night at a discount, then pump water up; during the day the water is allowed to flow down and energy is produced.

2) Wind plant in large numbers (10% world energy production) would, probably, cause much larger warming over land and cooling over sea. Near 1°C.

Mirco said at March 13, 2010 6:26 AM:

About the AWG shoddy science, there is an old proverb in latin:
Falsus in unum, falsus in omnia. False in one thing, false in every thing.
Given that the most important parts of the IPCC reports are show be false and done with politics in mind and not science, I will give them the same trust I give to political papers: none.
The only thing not lacking in the IPCC reports and AGW science in spinning and hyping.

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