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The Numbers in Wind Energy

Today I am looking at Americans and their very strange math abilities. While watching a campaign commercial for Obama, I realized why “capacity factor” in wind is regarded as the reality of power produced, even thought actual electrical generation falls far below that. When Americans speak of taxes, there is a tendency to speak of the top marginal rates. This can be 15% or 28% for most people. However, this is not the actual rate a person pays in. In most cases, the rate is much, much lower. The average effective tax rate is reported to be 11%, and for those earning less than $100,000 is more like 8%. One year, our actual tax rate was closer to 2%. Yet Obama continues to rant about Mitt Romney’s 14% tax rate as if middle class earners were paying a higher percent in taxes. The truth is, most are not paying over 14% as the ad suggests. (I will note that I have no deductions other than standard ones. There was a 401k contribution when the tax rate was 2%.)

When people see capacity factor for wind or number of homes served, they have the same blindness as when looking at the tax rates. It’s easier for the brain to just accept a number and not question. However, in the case of wind energy, as electric bills climb and “homes served” turns out to be “homes served at 3 am when the wind was actually blowing”, there will be consequences to this mindless acceptance.

Somehow, people need to realize that all is not as that 30 second sound byte says and if you never look beyond the simplistic numbers feed to you by the news media, there may be outcomes you failed to even consider. Head in the sand is not a good thing. It leaves another part of your anatomy exposed…..

When looking at 3% per year rate increases often found in 20 year wind power contracts, 3% may not seem like much. However, let’s look at a customer paying $100/mo for electricity. In my state, you can opt to pay at a higher rate to help cover wind. For purposes of this example, we are going to go with the customer paying only at the actual wind power rate (100% of his bill is at the wind cost).

Year Cost per month Increase per yr Year Cost Increase per yr
1 100 N/A 11 134 408
2 103 36 12 138 456
3 106 75 13 142 504
4 109 108 14 147 564
5 112 144 15 151 612
6 116 192 16 155 660
7 119 228 17 160 720
8 123 276 18 165 780
9 127 324 19 170 840
10 130 360 20 175 900

While each individual increase seems small, as the years go by, the increase becomes larger and larger. For individuals living on fixed incomes, this can be significant. Also, since it is a 20 year contract, there is no chance of the cost going down. With traditional power sources, as fuel becomes cheaper, the cost of electricity can be held down. However, the 20 year contract precludes such a decrease.

It is not clear if wind producers are paid for X amount of electricity per year whether they deliver it or not, but some locations are paying turbine owners even when the turbines are shut down due to cheaper hydro power because it’s “not fair” to the wind producers. No mention of fairness to customers.

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One comment on “The Numbers in Wind Energy

  1. I definitely agree about the problems of ‘installed capacity’ versus the power that is actually (or likely to be) generated and that 30 second news bites and ads often don’t give time to explain the difference (or people aren’t that interested). Love the Fulks science quote. Cheers

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Wolsten

Wandering Words

NOT A LOT OF PEOPLE KNOW THAT

“We do not believe any group of men adequate enough or wise enough to operate without scrutiny or without criticism. We know that the only way to avoid error is to detect it, that the only way to detect it is to be free to inquire. We know that in secrecy error undetected will flourish and subvert”. - J Robert Oppenheimer.

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