Wind Energy Economic Myths and Facts

Increasingly, opponents of wind power resort to repeating common myths about the technology and its impacts. This article is the second in an occasional series from the American Wind Energy Association (AWEA) aimed at debunking those myths with the facts.

In most cases, wind power costs more than electricity supplied using traditional fossil-fuel generation. However, the cost of wind power has dropped dramatically – by almost 90 percent – over the past 20 years. Today, wind power can be competitive with fossil-fuel generators if stable, supportive policies are in place. And the benefits of wind power projects to local communities can be seen across the U.S. As has been experienced by the entire industry, the absence of the renewable energy production tax credit (PTC) can bring the wind business to a halt. The PTC now provides a 1.8-cent/kWh tax credit (adjusted annually for inflation) for electricity generated with wind turbines, yet the most recent extension only continues through December 31, 2005. Over the past five years, the PTC has been extended three times. Each extension has nominally been for two years, although it has often seemed even shorter in practice because developers cannot move forward until the law is certain. This robs the industry of stable financial expectations for future projects. This “on-again, off-again” approach hobbles individual projects and the industry as a whole. The fact that wind power receives this tax credit is often used against wind energy projects. Yet tax credits are common in the energy sector because energy is vital to the economy and everyone has an interest in diversity of fuels. The U.S. government provides subsidies and tax breaks to all kinds of electricity sources, including traditional fuels such as coal, nuclear, and natural gas. A report prepared for the National Commission on Energy Policy found a low-end estimate for federal energy subsidies in 2003 to be $37 billion to $64 billion. Total wind energy PTC payments in that same year are estimated at $155 million – well under 1 percent of the energy subsidy total. The wind industry is not asking for a special handout; we simply want a level playing field. Another argument made against wind farms generally is that they harm local economies through impacts on property values or tourism. Both of these claims are false. The only serious U.S. studies done on wind projects and property values discovered no impact. Statements to the contrary do not represent real-world experience. Tourists in many parts of the country often go out of their way to visit wind farms. Local governments frequently work with developers to install information stands and signs near wind farms, as well as pull-off areas similar to “scenic overlooks” from nearby roads. The thousands of turbines in Palm Springs, California, have had no negative impact on the tourism business; on the contrary, the local tourism center organizes bus tours to the wind farms. In New York, a wind project in Madison County actually attracts tourists. The local Chamber of Commerce fields many questions about the project and provides directions on how to get to it. In addition to providing emissions-free electricity, wind farms create local economic benefits in the form of jobs and tax payments. Many people in the industry are familiar with the overwhelmingly positive impacts wind projects make on rural communities, but those unfamiliar with wind energy may look at developers skeptically. Skeptics should consider just two persuasive examples: In southeast Colorado, Prowers County sales tax collection rose by almost 62 percent in the year during construction of a 162-MW wind farm. Operation of the wind farm adds 15-20 good jobs in the area. And the county’s tax base rose by 29 percent, providing hundreds of thousands of dollars to local schools and medical centers. Tucker County, W.V., has seen more than $700,000 contributed to the local and state economies in the two years since construction of a 66-MW wind farm there. In addition, the county saw an increase in tourism in 2004. As in New York’s Madison County, local press coverage indicates that one of the most frequent questions at the local visitor’s bureau is from tourists wanting to know more about the wind farm and how to get there. Wind power projects are strongly beneficial to the local economy, boosting the tax base and helping family farmers stay on the land. For more information on wind energy’s economics, click on AWEA’s fact sheet at the following link:
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