Wind Energy Now Competes Directly with Coal on Cost

Utilities invest big in wind power, downplay environmental reasons.

By Gregory Brew,

Last week, Xcel Energy announced a multi-state wind capacity project, anticipated to be the largest in the United States. Spanning seven states, the project covers eleven new wind farms and would generate 3280 MWs at a cost of $3.5-4.4 billion. In its announcement, Xcel emphasized the cost-savings attached to wind power, arguing that it would save Xcel customers in the Midwest $7.9 billion over thirty years. This, rather than the environmental benefits of renewable energy, drove the company’s mission statement: wind was cheap, not just clean.

Increasingly, this is a line of argument companies involved in renewable energy are deploying, finding that it gets better traction from skeptical consumers and fidgety investors. Existing tax credits, most notably the production tax credit (PTC) that keeps costs low, as well as a tax rebate per kilowatt hour. These help wind compete with natural gas as a cheap source of electricity and has driven the surge of utility interest in harnessing wind power, despite the much-touted promises of President Donald Trump to bring back American coal.

Moody’s Investor Services now estimates that the falling costs of wind power directly threatens 56 GW of coal power, out of 87 GW surveyed. Moody’s report estimates the MW-hour cost of wind in the Great Plains region at around $20, while coal comes in at $30.

Total U.S. wind energy capacity grew 19 percent in 2016 and reached 5.5 percent of total generating capacity, outstripping hydroelectric as the nation’s largest source of renewable energy. Much of the surge in added capacity came from power companies and utilities eager to take advantage of the PTC before it is cut from 80 percent to 60 percent.

The author of the report noted that it was economic, not environmental logic that is driving utilities to adopt wind power, as Xcel plans to do. “Yes, it’s good for the environment and the consumers benefit from having cleaner power at a cheaper price, but at the end of the day, it is pursued by the utility because it is much more cost-effective.”

The PTC is already set to decline to 20 percent by 2019, and will be phased out after that. The decision to renew the credit in 2015 largely drove the current rush of investment. Those economic arguments tend to emphasize short-term gains, as the federal government has recently indicated it plans on eliminating many of the previous administration’s clean power regulations. That would threaten wind power’s cheap appeal and cause it to lose its competitive edge over natural gas.

But the surge of investment in wind power may spur on additional growth, especially if the price of natural gas increases (as the EIA predicts it will, by 2018). Berkshire Hathaway Energy Renewables, an energy developer owned by Warren Buffett, purchased a 400 MW project in Nebraska, while another Buffett company, MidAmerican Energy, bought 551 MW of wind online in Iowa, a state with the second-largest total wind capacity, 6,917 MW according to the American Wind Energy Association.

With these investments, Iowa expects $3.6 billion pumped into nearly 2000 MW of wind power capacity between 2017 and 2019. The interest of investor-owned utilities is matched by public utility companies in Iowa, Minnesota, North Dakota and elsewhere. Improving turbine technology is expected to further drive down costs, while innovation (such as new offshore projects in North Carolina and New York) will display wind power’s versatility.

It’s enough to make proponents of wind power optimistic, at least for now. There are reasons to believe that wind, even without the advantages of the PTC, can out-compete coal and even natural gas. Moody’s estimates that without the tax credit, wind costs increase to about $40 per MW hour. But further improvements in technology could drive that cost down.

Utilities like it because it protects customers from volatility in the fossil fuels markets. These arguments and the chance to add capacity at little cost in the short term, rather than the environmental advantages, are the main justifications for putting up new turbines nationwide.

For now, those justifications are enough to attract investors like Xcel and Buffett. But long-term, competition with natural gas for the utilities market will be fierce, particularly if gas prices remain low. The effects of federal regulation and legislation from Congress could shift advantages from renewable energy to coal. The EIA estimates that without tax credits, the costs of constructing and maintaining equal capacity wind power and natural gas power plants are nearly the same: $58.50 per MW-hour versus $56.40.

Right now, investing in wind power makes sense for utilities, allowing them to downplay the environmental arguments. But if the economic rationale for clean energy begins to wane, it’s possible that rhetoric around wind, as well as solar power, could shift once more. By Gregory Brew,

“I thought we had gas and electricity coming out of our ears.” But no. Hilarious video about self-inflicted energy problems in energy-rich Australia. Read… The Australian “Energy Market,” as Explained by Comedians

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  104 comments for “Wind Energy Now Competes Directly with Coal on Cost

  1. Mike Stevens says:

    Misleading article! Wind is only competitive because it is subsidized. Typical bias.

    • Wolf Richter says:

      Here is a little bit of reality for folks like you:

      Energy in general is massively subsidized in the US, none more than nuclear – the extent to which is just now becoming clear as taxpayers are on the hook for the endless decommissioning costs (see San Onofre in California which is going through the process right now). Oil & gas are subsidized in myriad ways. Hydro power, including the Hoover Dam complex, is usually funded entirely by taxpayers.

      Why is it that people like you always jump on the subsidies that wind and solar get and blissfully ignore the enormous subsidies other sections of the energy sector get?

      Typical bias.

      • Duke De Guise says:

        Also, though not used for generating electricity, petroleum is also subsidized, via the oil depletion allowance (as well as by the hundreds of billions spent on the military).

        Perhaps Glibertarians will someday realize that, not only is there no free lunch, there’s also no free market.

      • Posa says:

        Wolf… no one writes me a check for consuming electricity generated by nuclear power plants the way utilities are for using wind, or individuals are for going soar. The only subsidy that you can construe is general energy research and safety studies by DoE… Otherwise insurance and disposal are all factored into the rate base.

        • Wolf Richter says:

          Just look at the San Onofre deal. Nothing is figured into the rate base. It all has to be paid for now and for decades to come, and the plant isn’t generating anything anymore other than radiation and expenses, for decades to come…

          This idea that it’s all figured into the rate base is nuclear power industry propaganda that falls apart the moment the plant is taken off line.

        • d says:

          “no one writes me a check for consuming electricity generated by nuclear power plants”


          BUT the, state, fed, and municipality’s, give you a FFFF ING HUGE bill in Your taxes, for decades to come, to cover the deacon costs, and YOU WILL PAY it.

          Whilst crying green energy is unfairly subsidised.

          That’s before we consider environmental and human health damage, done by the nuclear and fossil industries.

          People like you can find the root of the problem’s caused by nuclear and fossil energy, easily.

          Go look in a mirror.

        • Posa says:

          From the federal energy commission:

          “An entity essentially recognizes a liability for the fair value of an asset retirement
          obligation at the time the asset is constructed, acquired, or when a change in the law
          creates a legal obligation to perform the retirement activities. Upon initial recognition of that liability, an entity also increases the cost of the related asset that gives rise to the
          legal obligation by the same amount. The liability is increased over time until the actual
          retirement activity commences. Additionally, the asset retirement cost capitalized is
          depreciated over the same life of the related asset giving rise to the obligation. An entity
          is required to re-measure the liability due to the passage of time and certain other changes
          in the estimate of the liability. ”

          2. As for San Onofre… this was not a usual decommissioning … it was caused by defective parts… Mitsubishi was sued and paid up for these costs

          “In April 2016 the California Public Utilities Commission approved $4.41 billion in decommissioning costs for them, from funds held in trust.”

        • Wolf Richter says:

          I’m really tired of this nuclear lobby propaganda BS you’re citing (from of all places) on San Onofre. So read this carefully. It’s from Jan 2017:

          “San Diego nonprofit Citizens’ Oversight sued to overturn the 2014 settlement, which assigned customers $3.3 billion of the $4.7 billion of costs from the January 2012 closure of the plant amid a radiation leak.”


          I’m now convinced you’re a paid troll from the industry. None of your future comments on energy will be posted.

        • Thank you Wolf! Shut down trolls.

      • TJ Martin says:

        If I may I’ll add to the discussion that when it comes to the tax payers dollar the second largest recipient of that dollar [ after the military ] goes to corporate subsidies the majority of which goes to the petroleum industry

        Funny .. isn’t it Wolf how they’ll scream and cry communism/socialism about subsides when it comes to renewable energy and health care … but its just fine to drop billions of subsidies into the back pockets of the petroleum industry and other corporate and manufacturing entities .

        Ahh … hypocrisy reigns supreme here in the good ole US of A .. especially from the far/alt right

        • Lee says:

          Yeah, let’s get rid of those corporate subsidies the tax area: deductions for depreciation, depletion, R & D, interest on debt, and might as well throw in wage costs as well……………

          And for the individual home mortgage interest deductions, the EIC, college/university subsidies, etc.

          And to reduce military subsidies might as well restart the draft, but across all age groups especially for those who haven’t served. Pay the new people half of what the poor E-1 saps get now – about $750 a month seems about right.

          Start off with a two year stint and then 1 year every five years. Since this is service to your country the pay/time shouldn’t count for social security or retirement. Another way to reduce subsidies across the economy.

          The draft would be a good way to also solve the obesity problem in the USA and in turn reduce health care costs. Get those fat slobs fit.

          Of course following the theme of equality women would also be included: the SJW’s would be thrilled as well. A great idea: a totally integrated military and they could even try out some of those nutty ideas with bathrooms and showers……no need to build extra facilities.

          The left should also love it as it would increase interaction between different social and wealth classes in the economy. Just imagine all those high tech people interacting with the gangbangers from Chicago!!

          And to make it even better the first ones in line for the draft should be elected officials across the entire government spectrum from local school boards all the way up to the Presidency and Supreme Court.

      • Aaron says:

        Oil and gas are not subsidized per the commonly understood definition, like say wind or nuclear. There are various tax deferral schemes around the world to encourage investment but that is not the same thing as propping up an industry with direct government money or guaranteed inflated prices per MWhr.

      • Valuationguy says:

        I would suggest everyone take a perusal of the “analysis” that underlies the premise that wind is now cheaper than coal (or gas) investment.

        Here is the link to the 2017 EIA report:

        Several things jump out just reading the first several pages

        1) the real weighted cost of capital assumed for coal is ASSUMED 3.0% higher than ALL other sources (8.6% rather than 5.6%….a 54% higher assumption…which drives their ‘levelized’ capital cost to be 25% higher than NUCLEAR…and 100% higher than onshore wind).

        2) the report’s assumptions are based on Obama’s now trashed environmental policies which provide significant penalties and cost adders for clean coal. (i.e. even if the +3.0% adder for coal to the WACC was justified under the Obama admin….the assumption is no longer valid under the current admin)

        3) The report specifically identifies (highly subject to change) gov’t tax credits for wind/solar/geotherm which reduce their cost ($/MWh) by 12%, 22%, and 7% respectively.

        4) Capacity factor…a key component of the equation… ASSUMED by the EIA for wind is 40%…yet actual capacity factor measured by the EIA for wind has never pierced 35% (yearly average)….and wind farms capacity factors are probably likely to DROP (rather than rise) as future development sites are generally LESS FAVORABLE than the sites already built. (Logically…the best (highest capacity factor) sites for building wind farms would be built first due to ROA and ROIC factors….)

        5) EIA reference case assumes a 34% rise in average natural gas prices (~5% annually) by 2022 (which may or may not happen…) which is a large variable cost which wind avoids. (I’m not saying they are wrong…just that the uncertainty in this assumption is very high and any lessening would generally put natural gas-fired plants back on top.)

        6) Coal prices is expected to increase 8% over the same period (which seem very modest) but ignores the fact that most U.S. coal is sourced from the vey low-cost Powder River Basin ($0.65/MMBTU (without transportation) vs EIA estimate of $2.06/MMBTU (all in) for the country) with transportation being the single largest cost adder. With railroad rates dramatically falling due to slowing traffic as the economy (and trade) slows….this low cost coal become MORE economic…so even 8% inflation might be highly unrealistic. Plus the Trump admin will again start leasing more Federal land in the PRB for coal mining…increasing its supply.

        I’m not saying that wind is bad….in places it make A LOT of sense. But the claims of the eco-minded who expect it to be the answer to our country’s energy needs while forcing the closure of coal-generating energy sources is misleading.

    • Lune says:

      So I guess the federal black lung program isn’t a subsidy for coal? Must be all them wind operators getting black lungs and sucking on the federal teat for their treatment.

    • David Henderson says:

      Pumped hydro facilities are widely established, and they are indeed a sunk cost. They enable a late afternoon/evening surge in power consumption with a constant supply power plant base.

      Let it be granted that pumped hydro exists. How do you apportion the cost split of a pumped hydro facility between a base load (coal OR nuclear) capacity and a solar electric that generates peak power at noon when most people dont need it?

      Suppose that cheap NG fueled power plants are already installed for the supply of peak loads. How do you figure out the optimum in this mix?

      Pumped hydro storage and NG storage in caverns are both cheap. Batteries for solar are quite expensive. Nobody seems to be figuring on storage costs.

      Why is this absent from the discussion.

  2. DK says:

    It would be informative to see the various energy sources and the government subsidies that each are allowed. Be it tax breaks, rebates, etc… It seems to have a large effect on whether or not one form is more “profitable” than another.

    • Dave says:


      What are the government subsidies for geothermal energy like The Geysers in Napa? Is geothermal energy a viable option in the US?

      I’m only inquiring because I’ve seen Berkshire’s numerous geothermal sites near the California/Mexico border.

      • Valuationguy says:

        The direct tax credit subsidies amount to approx decreasing the levelized cost of geothermal by 7% according the latest EIA report. (Specific projects might have different subsidies…but that this the average geothermal tax credit.)

        (See my post above discussing the EIA report most of the cost comparison data is sourced from.)

  3. Posa says:

    And what happens when the wind doesn’t blow?

    How cheap is wind power then? As for subsidies, taxpayers underwrite these funding streams… taxpayers and ratepayers are the same people (and if they aren’t then that’s even worse, because it means wind power consumers are leaching off of others).

    PS. Who wants to volunteer to live next to a wind farm.

    • Gerald Stehura says:

      How cheap will it be to deal with flooding cities? Rising oceans? Mega forest fires? Droughts in our farm country? Chaos in our weather patterns? Dying oceans? Heat waves? Destructive storms? Tens of millions of starving and displaced immigrants? Time to face reality!

      • Posa says:

        Fake news. The IPCC says in AR5 there is no increase in Extreme Weather. If you’re so concerned about flooding, don’t build on the edge of the ocean as they do in Miami and Lauderdale.

        • Rusty says:

          Tell the people of Pinedale, Wyoming that, as they got over 2x their average amount of snow this year, as did a lot of Montana and Wyoming. The jet stream patterns are changing because of global warming, bringing the Arctic Oscillator further south.

          Looks like you have a paid disinformation troll here, Wolf.

        • Nicko says:

          Even the oil companies recognize climate change is a reality and are heavily investing in the renewable sector. But hey, no one is forcing you to invest in the future.

        • TJ Martin says:

          Fake news indeed . Yours that is . I’ve already ‘ burned ‘ the source you’re trying to quote which is a spoofed IPCC address and a counterfeit IPCC website .

          Here’s the Forbes article that shows what the IPCC is really saying versus what the NIPCC [ which is fully funded by the petroleum industry ] is saying . Suffice it to say your ‘ source ‘ is quoting the NIPCC in a blatant attempt to deceive

          Which shows just how low the petroleum industry and the climate deniers will go . Now spending the time and money to create spoofed web addresses and phony websites that look like the real thing .

          PS; Consider yourself ‘ burned ‘ as well . The irony being …. by one of your own . Forbes

        • Gerald Stehura says:

          Please!!! Climate Change is real. Open your eyes.We have known about this threat for over 50 years. Time to wake up. Fake news comes out of the Trump asylum.

      • Randy says:

        Hasn’t happened and there is no indication that those disasters ever will. Looks like we’re actually cooling heading into a solar minimum.

    • Wolf Richter says:

      You know who the biggest wind power producer in the US is: oil-state Texas. Why? In West Texas, the wind nearly always blows. Ask a Texan about it. One of them explained the logic to me this way: “You mean they pay me for wind?” It’s just business logic.

      Wind power in Texas took off under Republican Governor Rick Perry.

      • Otto Maddox says:

        Here in California, electric use almost always peaks on a hot summer day characterized with no onshore flow (wind). Wind production is near zero and therefore useless.

        Add to this the massive bird kills and the visual blight, and it is not as wonderful as the Greenies claim.

      • Tam says:


        I drove across the continental United States (Bakersfield to Memphis) on I40 this past Nov-Dec. Wind farms everywhere, especially in the panhandle of Texas and Oklahoma. Literally as far as one can see, there were wind generators everywhere.

        Most of the generators we saw were on hilltops and on actual agriculture farms. It seems like the farmers are leasing out their land to the electric companies and making some $$ on the side.

      • Dan Romig says:

        One other place that the wind nearly always blows is eastern North Dakota. North America had a great glacial lake, Lake Agassiz, between 30,000 and 10,000 years ago, and when it melted, the land was flat as a pancake. North Dakota has a lot of wind turbines in this region.

        As a customer and shareholder of Xcel Energy, I am damn glad they’re investing in turbine power.

        • Lee says:

          Glacial Lake?

          Lake Agassiz?

          Ice Age?

          Nah, that can’t be right – climate change didn’t exist back then as there wasn’t any industry, automobiles, coal mining, or petroleum extraction!!!

      • Alfred (Melbourne) says:

        “Where I live (San Francisco) the wind picks up late morning and blows like crazy for the rest of the day.”


        I checked your wind for San Fransisco for this week on and you can find it here:

        And here is a typical profile for the energy produced by a wind-turbine:

        At a wind-speed of 3.5 meters/second (12.6 km/hour) no electricity is produced. When wind-speed is 14 meters/second (50.4 km/hr) the turbines start operating at rated capacity. If the wind speed is half-way between these two speeds, it produces around half its rated capacity.

        The wind-speed in San Francisco is going to be too low for the turbine to produce anything of substance for the next 7 days – because the forecast is a wind-speed varying from 3 km/hr to 27 km/hr.

        • Wolf Richter says:

          Yeah, this is rainy season in SF, so we get some weird weather for a day or two. Then it’s back to normal. Right now, 6:25 PM we’re back to normal, wind blowing from the West as it usually does. Wind speed at 14 MPH. And more in the hills where the wind turbines are. Perfect for wind generation.

        • Alfred (Melbourne) says:


          Good. I am glad you are happy with the climate data. :)

          I hope they go ahead and erect wind turbines all around California – and for the Canadians to charge the real market price for their hydro backup.

          California’s Growing Imported Electricity Problem

          In the summer of 1970, I met the chief engineer of Bechtel at their head office in SF. My friend had arranged it through his Dad. We were hoping for a summer job. This gentleman took us to a room with a large model of a nuclear power station (San Onofre ?). He told us that Bechtel had 23 nuclear power stations under construction. If anyone had told him that 50 years on they would be building wind turbines, he would have laughed.

          I am not suggesting that these 23 power stations are safe by modern standards.

        • Wolf Richter says:

          Yes. Thanks for the tidbit on the Bechtel engineer. Today we’re struggling with San Onofre which is being decommissioned due to leaky pipes. It’s a huge scandal in Southern Cali where the plant is. And no one knows what to do with the spent fuel. Corruption is involved too, in California, go figure!

    • Lune says:

      We also are paying for yucca mountain to store all that nuclear waste that nuclear plants produce.

      And as for where to live. If my choice was to live next to either a wind farm or a coal fired power plant or a nuclear facility, I’d take wind in a second. I bet most people, including you, would.

    • TJ Martin says:

      ” Who wants to volunteer to live next to a wind farm ”

      Me for one . Fact is I did . Built my own windfarm when living in VT that provided power for my household as well as three neighbors . Hardly ever had to resort to backup . So what exactly in your uninformed mind is the issue ?

      As for subsidies as Wolf and several others including myself have stated … every form of energy is subsidized … especially petroleum .

      • RD Blakeslee says:

        “So what exactly in your uninformed mind is the issue ? ” TJ M.

        Why do you need to insult folks?

        The issue for me is esthetic – I greatly value the beauty of the hills and mountains where I live and would be afronted by huge windmills along the ridgetops.

        • Lune says:

          The question is compared to what? Assuming electricity must be produced, would you rather have windmills on those hills and mountains, or a nuclear power plant on them, or a soot belching coal power plant? The option is not wind or nothing. It’s wind vs coal vs nuclear vs gas. Which would spoil your view more?

          IMHO, traveling through appalachia and seeing how disfigured those beautiful mountains have become from coal mining, I’ll take a wind farm any day. Similarly, nuclear facilities are usually sited on waterfronts due to their tremendous cooling requirements. What’s more disfiguring? A hundred acres of prime beachfront around San Onofre nuclear plant fenced off, or distant offshore wind farms that you can’t even see?

  4. Jarhead John says:

    So wind is “competetive” with coal and NG as long as there are federal/state tax credits and rebates…could this be the bastardization of another adjective in the english language….

    • Wolf Richter says:

      I’ll say it again…

      Energy in general is massively subsidized in the US, none more than nuclear – the extent to which is just now becoming clear as taxpayers are on the hook for the endless decommissioning costs (see San Onofre in California which is going through the process right now) despite promises to the contrary. Oil & gas are subsidized in myriad ways. Hydro power, including the Hoover Dam complex, is usually funded entirely by taxpayers.

      Why is it that people always jump on the subsidies that wind and solar get and ignore the enormous subsidies other sections of the energy sector get?

      • alexaisback says:

        taxpayers are on the hook for the endless decommissioning costs

        preaching to the choir there, I have always stated that to anyone that would listen

        they cannot safely dispose of nuclear waste, it is impossible.

        how can you say my electricity cost $ .
        when you do not have any safe manner to dispose of it, and most of the waste sits onsite for years on end.

        Nuclear is the worst, look at Fukishima. Still polluting with no possible way to stop it. They have yet to invent the technology to get near it.

        • Nicko2 says:

          Modern nuclear reactors are much safer than decade old designs. Regardless, around 20 are under construction in China, 4 under construction in the States.

      • subunit says:

        “Why is it that people always jump on the subsidies that wind and solar get and ignore the enormous subsidies other sections of the energy sector get?”

        In the case of fossil fuels, it’s at least in part because most of the largest subsidies (externalisation of environmental costs on the entire supply chain from extraction to emission, costs associated with maintaining imperial satraps in the middle east, etc) are implicit rather than explicit. If you can externalise your subsidy you can claim it doesnt exist.

      • Jarhead John says:

        Wolf…you got me…there are statutes, and ordinances across this country against outdoor advertising because it is considered a disruptive eyesore….not “blending in with the skyline.” Meanwhile, while driving through western Kansas…eastern Colorado and west Texas all I can hear in my mind is “you’re getting very sleepy…just follow the rotating fan….Dr. Fanblade is here with free hypnosis. These contraptions generate excessive noise…kill species of birds…consume acres of land…while producing meager electric output per unit…The technology has a long way to grow before, in my mind at least, I will consider this a viable alternative to fossil fuel electric generation…

        • JSM says:

          1. These “contraptions” kill fewer than 500k birds annually in the US. Compared to: Cars ~10M, Buildings ~100M, Cats ~1Billion. Seriously This is a tired and illogical argument that needs to die.

          2. Driving thru most of those regions generates eye soreness due to the lack of anything interesting to see anyway. The wind farms actually give you something to look at.

          3. It’s not as though the turbines make the land around them unproductive. I still see wheat growing in fields and cattle grazing.

      • Rob says:

        At the end of the day you need a certain capacity of base load. Try run a manufacturing business exclusively on wind or solar.

        • Wolf Richter says:

          We already have that capacity in place (Your lights come on when you flip the switch, right? Well most of the time). The fallacy is to claim that you have to BUILD a backup plant, and thus invest even more money, to back up wind power installations. No you don’t. You just use the capacity that already exists. Wind power just adds additional capacity.

          And the fuel is FREE!

        • Rob says:

          Hi Wolf, thanks for the response. I was unable to reply to your comment though. You reiterate my point, we need base load and it needs to be continually online, these plants are not able to ramp up at the whim of wind or solar, or lack thereof. I have 5kv installed in my home in Southern Africa and it works fine, mostly, just so long As I remember not to use the hairdryer/ vacuum while pool pump is running. I just see that one always needs a base load capacity for industry that wind or solar cannot manage. Yes we have plants, right now but they will need replacing maintains by other base power generators at some stage. The coal mines to feed them will need to be kept online too. I think wind and solar are great for individual households but not grid electricity, regardless of subsidies. Thanks for all the info on your site.

        • Wolf Richter says:

          Yes we need base load capacity, but we already have it. That was my point. We have plenty of it. So there is no reason to build more of it just because we’re adding more wind or solar.

          This may be different in South Africa. But in the US, electricity consumption has been stable in recent years, and down slightly in some years. In California, it has been declining for a long time. There are various reasons, including efficiencies, conservation, sending some heavy industries overseas, and the like. So we have plenty of base power capacity. What wind and solar are doing is changing the mix. So we burn less fossil fuels and use more renewables. It works pretty well.

        • Alfred (Melbourne) says:

          “Try run a manufacturing business exclusively on wind or solar”

          “We already have that capacity in place (Your lights come on when you flip the switch, right? Well most of the time). ”

          Bob and Wolf,

          Generating electricity the conventional way is a “manufacturing business”. You cannot speed up massively and slow down massively a car manufacturing operation several times per day so why do you think you can do that with a coal-fired plant or a nuclear plant?

          Try and run the base-load operation so that it only generates electricity when there is no sun and no wind – it makes absolutely no economic sense.

          By giving preference to wind, you are actually going to destroy your backup. That is exactly what is happening in Australia. A small percentage of wind is tolerable and anything more destroys the base for the grid.

        • Wolf Richter says:

          What happened in Australia is a screw-up of phenomenal proportions by operators and the government entities involved. It doesn’t prove anything other than that stupid decisions get made, and then wind power gets blamed. This is just total nonsense to drag this out as an example for why wind or solar aren’t useful additions to an energy portfolio.

        • Alfred (Melbourne) says:


          Seemingly my comment on the situation in Germany and Australia is unworthy of being posted here. The USA is determined to go through its own expensive learning process. As Einstein supposedly said – “Insanity: doing the same thing over and over again and expecting different results”

          Let me explain you here how the real – hidden – subsidy for wind operates.

          Imagine a situation where wind turbines were obliged to provide power at fixed amounts by time and date to the grid. If they cannot not deliver, or exceeded their quota – just like other power plants are obliged to do – they would have to buy it from elsewhere. In order to keep their side of the deal, these wind parks would have to buy insurance to cover the periods when they are unable to perform as per contract. Now, try and work out the cost of this insurance and that is the hidden subsidy that I am referring to.

      • Tim says:

        Wind and Solar are subsidized just like oil and gas are, and in addition to it.

        Come off it, most of the “subsidies” people scream about in regards to oil and gas are the standard deductions and write offs all businesses get for risk taking and R&D.

        Solar and wind get those, as well as additional direct subsidies.

  5. Maximus Minimus says:

    And the very dirty mining of rare earth elements for magnets happens to be in China, and safely out of sight. A special bonus for that.

    • Nicko2 says:

      As a matter of fact, Lithium mines are opening in several US states (ie. Nevada, Wyoming, and others).

      • drg123 says:

        Lithium is not a rare earth metal, and is not used in magnets. It is used for its ability to store and release large amounts of energy, in things like batteries and torpedo motors.

        Rare earth magnets are made with elements like neodymium, which only form in supernova explosions and get deposited on earth in scattered fashion over eons. Although rare earth metals are actually found lots of places, it always requires a great deal of mined ore (earth) to produce the pure element. Hence the term ‘rare earth’.

        The environmental cost of mining the magnet material is indeed hidden away in China, and should be considered in these sorts of discussions. It rarely is. It’s probably less than the decommissioning cost of a nuclear plant, but it isn’t zero.

        All of that having been said, I have been on a 100% wind plan for years.

      • Maximus Minimus says:

        Complete non sequitur. But since we are on the subject. Lithium is produced from salt brines eventually by electrolysis using a great amount of electricity again.

        • Jerry Bear says:

          Lithium is the third lightest element and has very small atoms. A gram of lithium has a LOT of atoms and can thus provide a lot of electricity. This is the reason why it is so important in battery technology.

    • Stig says:

      Any excuse to kiss big oil, nuclear and coal’s ass. If you haven’t yet to changed your furnace back to coal fired, you have nothing to complain about. Oh, and forget about the fact that nearly every electric gadget either uses them or needs them for their manufacture. Its hard at times to endure such ignorance.

  6. Peter Mott says:

    In the UK – which is a windy place – a problem is emerging. Because the marginal cost of subsidised wind is effectively zero, and because renewables always get to sell ahead of coal/gas people don’t want to build or maintain coal/gas stations because they can’t sell enough electricity to make a profit. So the UK government has introduced a new subsidy system, called “capacity payments”. These are payments made to gas/coal to keep their stations available for when the wind doesn’t blow. So everything is subsidised and there really is no energy market anymore.

  7. Nicko2 says:

    Wolf, excellent timing considering Trump is trying to turn the US back to the 19th century.

    The renewable energy sector employs around 600,000 people in the US, and will continue growing year on year. Coal is well under 50,000 and falling. We all know fracking will be here to stay for decades.

    Wind, solar, geothermal, lithium batteries, molten salt energy storage, high efficiency natural gas plants, wave power, not to forget transitioning to LED and other hyper efficient technology standards (ie. smart homes, smart appliances). The future is here. Trump’s agenda is a dead end.

    Sadly, the US is quickly falling behind in the renewable energy adoption race – competitors such as Germany, China, and even India are sinking hundreds of billions into the sector – but it’s never too late.

    • Jonathan says:

      Yup, the LED revolution caught the entire world off-guard. 2 years ago I changed all my house lights to LED and each generic LED array cost just $1 each ordered straight from China. Even if it isn’t as reliable as major brands like Cree it’s still way ahead of CFLs in both upfront and running cost, plus killing off demand for environmental unfriendly CFLs is a big win in my green book.

      Also, think about how much knock-on energy demand got killed by smartphone+Internet economy. e.g 100W+ PCs of yesterday are replaced by phones that costs less than $1 in energy bills yearly, video rental/camera stores are all but dead, # of car trips saved by ordering online etc.

    • Tim says:

      One thing. The renewable industry employs way more people despite producing what? 1/30th the energy of oil and gas?

      Grossly inefficient.

      • d says:

        “One thing. The renewable industry employs way more people despite producing what? 1/30th the energy of oil and gas?

        Grossly inefficient.”

        Not only do you like pollution you like unemployment as well.

  8. TJ Martin says:

    Seeing as ever since we’ve come back to Denver the ‘ brown cloud ‘ and Orange – Red air quality days have increased both in frequency and intensity over the last decade …. Here’s hoping Excel has the sense to bring Wind Power to Colorado’s front range as well [ Denver- Boulder – Colorado Springs – Pueblo ] And heck .. if it saves money to boot .. I’m all in

  9. Earl Smith says:

    Back to reliability.
    The UK frequently has a problem with wind in that on the cold winter days when everyone want to turn on the heater there is little wind.

    Look at what happened to South Australia. A little storm with moderate winds came through and the turbines shut down on over speed. Since the storm covered the entire state this caused the grid to trip and the whole state went black. They also have a problem of the rest of Australia not wanting to supply the needed electricity when the winds are calm.

    To properly safeguard the electric grid you need an equal amount of standby power to make up for the (slow) loss of power. (the instantaneous drop from tripping can not be compensated). To provide this standby you need gas turbines running continuously with zero load which uses up about 25% of full load cost. This is a subsidy that is not even counted in the “cost estimates”

    The real reason for the push to build wind power is that the renewable lobby has succeeded in forcing government to mandate that utilities have a minimum percentage of power generated from “renewables”. With these laws even the most uneconomic renewable generator makes money as long as the government holds the gun to the utility’s head. The costs of course are passed along to the customer, who complains about the evil utility price gouging not the hidden expense caused by government mandates.

    • Wolf Richter says:

      Yo wrote: “To properly safeguard the electric grid you need an equal amount of standby power to make up for the (slow) loss of power. (the instantaneous drop from tripping can not be compensated). To provide this standby you need gas turbines running continuously with zero load which uses up about 25% of full load cost. This is a subsidy that is not even counted in the “cost estimates”

      This is so much BS I don’t even know where to start.

      All power plants – including coal and gas – need a backup because they will be taken off line for various reasons, and then power has to come from somewhere else.

      Every nuclear power plant needs a backup because nukes are taken off line for two months or longer at 18-month or at 24-month intervals for maintenance and refueling. here’s a Chart that shows what happens:

      That’s why there’s something called a “grid.” So that grid operators and utilities can shift the supply of power to the least expensive source at the moment.

      The grid hardly ever runs at 100% capacity. So wind power does not need ADDITIONAL back up. That backup is already there! Wind power just adds capacity. The constant claim that you have to build a natural-gas back-up plant for every wind power installation is oil&gas-troll material. It’s in effect an idiotic claim.

      Australia’s situation is a major screw-up by the operators and the government. Check out the video I posted on it the other day. It’s funny too.

      • Thor's Hammer says:

        The power grid in North America and most of the world serves to connect alternating current (AC) power sources with multiple end users. It is based upon this type of electricity for reasons both historical and technical. However if you wish to transmit electrical power over longer distances, HVDC (high voltage direct current) is much more efficient with markedly lower losses. So much so that it could enable a new interconnected renewable energy network. And those massive power lines can be buried underground instead of being towering eyesores.

        If the US were to build a backbone HVDC network it would partially solve the intermittancy problem inherent in all renewable energy sources. When the wind isn’t blowing in Texas it may be howling in the Columbia Gorge. Solar energy from California follows a different cycle than wind in Iowa. And solar energy or wind energy can be used to pump recycled storage capacity into existing dams in the Columbia and Colorado river systems or newly constructed holding basins.

        Add in a base load system of LFTR reactors with automatic cold shut down capability and no high pressure cooling requirements and you start to have a sustainable energy system for a modern technological society.

        Naa– let’s follow our Idiot-in-Chief over the cliff instead. Drill baby Drill. Frack like there is no tomorrow. Build a wall around Miami and Manhattan to keep the ocean out. A new dust bowl in the midwest? Not to worry, the dust will just land somewhere else. An ice free Arctic ocean? Great. The Exon/Mobil/Rosneft consortium being negotiated by Tillerson can populate it with drilling platforms. And if we don’t like the new climate we’ll just hire Bill Gates to seed the sky with magic dust and create the climate we want.

      • Lee says:

        The simple answer to the problem in South Australia is that they got rid of most of their base load fossil fuel generation in their idiotic quest to go to green with wind and solar.

        Victoria is following suit in getting rid of 25% of its base load fossil fuel generation capacity.

        Only a few more days until that is shut down for good.

        We had a reasonable summer this year here in Victoria with no 40 C degree days.

        I can hardly wait to see what happens here when we get a week of 40 plus degree days like we did in January 2014.

        Brownouts and blackouts are coming. Life is going to be miserable in the wonderful world of Oz.

      • Peter Mott says:

        ” So wind power does not need ADDITIONAL back up. That backup is already there!” At low levels of penetration wind power does not need additional back-up. But when wind is a bigger player it does. This is obvious. The more subtle point is that wind drives fossil fuel out of the market. So the backup is closed down. It started to happen in the UK which is why the government introduced a whole new subsidy system (“capacity payments”).

  10. mean chicken says:

    Seemed like wind and solar were disappointing for years while thousands of windmills were being installed in West Tx., where the wind is fierce.

    So my question now is if this article’s incorrect, or is this another case of setting up muppets for distribution into strength?

    “Clean energy investment declining”

    Inquiring minds….

    • Wolf Richter says:

      Investors are not disappointed with their wind-power installations.

      However, TXU, once the largest utility in Texas, and heavily concentrated on coal, went bankrupt. So some investors, including some of the biggest PE firms, were likely disappointed.

      • mean chicken says:

        Also, fruit growers aren’t subsidized, while corn growers are.

        • Wolf Richter says:

          Don’t even get me started. I have friends who own some ag and ranch land in Oklahoma. Nice place. They’re getting paid for NOT growing anything on it.

  11. Sally Samsara says:

    And wind technologies keep on evolving.

    This Minnesota based company– Sheerwind– has a system that can work with wind from all directions, at 2mph and above and generate 600% more electrical energy than commercial blade systems.

  12. walter map says:

    Obviously, countries committed to fossil fuels are dedicated to decline.

    The International Monetary Fund estimates that global fossil fuel subsidies, including social and environmental costs, amounted to $5.3tn in 2015, equal to 6.5% of global gross domestic product.

    Profiteers are nonetheless prepared to consign even major powers to poverty by corrupting governments into pursuing obsolete fossil fuel technologies.

    U.S. society, for example, already compares badly to other Third-World countries in several respects and is getting worse as efficiently as possible. Even Vietnam, Chad, and Bangladesh provide for at least 14 weeks of paid maternity leave, while the U.S. does not, evidently convinced that backwardness is some sort of achievement:

    There are many such examples.

    • mean chicken says:

      Skate to where the puck will be. Who would’ve thought TBTF would be given a get out of jail free card?

      Our $20T of debt zoomed from $10T all “for the children”?

  13. Ishkabibble says:

    Great article and great comments, Wolf. Bang on, especially about nuclear power (an industry in which I worked for few years).

    Solar is also making a great contribution to total electric demand, but the sun has to be shining.

    If the so-far intractable problem of how to efficiently store excess electric power from renewables is ever adequately addressed, it will be truly off to the races for renewable energy and the beginning of a much more difficult life for the traditional alternatives.

  14. Kent says:

    One of the great things about wind and solar that rarely gets mentioned is the incremental costs of increased production are ridiculously small in comparison with traditional generation methods. When you reach capacity on a $500 million nat gas plant, you have to build another expensive plant. Need more wind power? Add another turbine. Hugely economical.

  15. Thor's Hammer says:

    Better sharpen your pencil before you make statements like that. The capex for a wind generation system are by no means ridiculously small. Wind is a local/regional phenomenon, so first you have to acquire the land rights, build transmission line infrastructure to get it to the market, integrate it into the existing grid, and perhaps expand the base load support generating capacity to match the additional variable input from wind. If your infrastructure is already at maximum capacity, you can’t just add an additional turbine for 2 or 3 million and walk away.

    That said, the life cycle costs for a given amount of wind generated power over time are likely already lower than the same amount of electricity produced from burning any fossil fuel, be it NG, coal or oil, in large part because so much of the real costs of burning fossil fuels are hidden and never accounted for. (until they appear in things like health problems and climate change)

    Perhaps what you meant to say is that the marginal cost for “fuel” (sunlight, wind, tides) for a renewable energy system is near zero.
    In total contrast to fossil fuel costs which cannot be predicted over the future 20-40 life of the new plant, except to anticipate that all the arrows point to them going up!

  16. james wordsworth says:

    Of course coal, oil and gas are subsidized, and heavily so.

    In a real market the consumers/producers would have to pay at least the replacement cost of the good they are buying. What you really have are oil companies for example paying only the exploration and extraction costs of the oil. They are not paying for the production cost (done by the earth over millenia). They are essentially ripping mother earth and future generations off. They should be paying a far far higher cost to compensate for irreversibly extracting the oil. In fact they should have to pay for the recapture of the carbon released when the oil is burned. Only then can they be said to not be receiving a subsidy.

    Fossil fuel extraction is massively subsidized, and it is time it had to pay the true price.

  17. ernst unseld says:

    Dear wind energy lovers: wind is an extremly volatile energy. Up to date there exists no good energy storage system for solar/wind energy. Thus the volatility places an enormous stress on the electric grid. Here in Germany we should know. We where near a breakdown several times and the costs for managing the grid are rising.
    Over and above we ended up with a double system: gas/coal generated electricity for all the days/hours/minutes where there isn’t enough wind generated electricity. But these plants can’t be shut down in a moments notice. They need to be operated constantly. So, if it blows hard, there is too much electricity: wind energy is sold for 0 € (!) to the neighboring countries to get rid off it. These countries, in turn, complain that these prices are the ruin for their coal/gas energy operated plants. Meanwhile, in Germany, we have the highest prices for electricity in whole Europe, because the subsidies needed for building/maintaining this double system are so high.

    • Flying Monkey says:

      I live in Germany too. We pay about double what they pay in the states per kwhr. We also have to pay to “destroy” energy when the renewables generate too much.

      One thing good to know with wind energy is that power of the wind increases as the cube of the wind velocity.

      If the wind speed doubles you have 8 times the power output. In theory 7 wind turbines have to be shut down for everyone working, to maintain the power balance. But then again, the turbine may not be safe to run in the high winds and the blades feathered and the whole wind park shut down. Then you have no power. :(

      If the wind speed falls in half the power falls to 12.5% of the original speed.

      With that exponential leverage factor it pays to have stable winds. Either you will have little power or excess power, but the probability that you have just the right amount is low.

      I always thought you could run a “hydrogen” storage system (hydrogen battery) to use the excess power in hydrolysis. You have to have sufficient water. One kg of Hydrogen requires 9 kg of water.

      (the hydrogen has a molecular weight of 2 and oxygen 16; hydrogen is only a fraction 2/18 by weight in water therefore you need 9 kg of water to make 1 kg of hydrogen)

    • Arc d'Eath says:

      I live in Germany too and heard about Austria accepting (for €0) the excess electricity from a windy, sunny Germany, storing it in their water generators (effectively used Germany’s electricity to pump the water up the mountain into the reservoir).
      A few days later, a cloudy, windless Germany had to buy that energy back from their neighbour.
      Apart from the fact that windmills are unsightly and (presumably) need a large amount (of cheap oil) energy to produce, I wonder about their life expectancy.
      If the “oil is a limited resource” story isn’t a lie, then in the very near future there simply won’t be the cheap oil energy to provide a cost-effective maintenance (equipment (cranes), fan-bearing production, copper motors – rusting towers – especially sea parks) for these machines.

      • Wolf Richter says:

        How about rusting radioactive hulks from shut-down nuclear power plants that will be there for decades … we’re starting to have some of those already, in the decommissioning process.

        Or old coal power plants? They look terrible too, but they’re a lot easier dismantle than nukes. No power plant works forever.

        It’s amazing what kinds of “reasons” the anti-wind power propaganda lobby drags out to oppose wind power.

  18. Raymond Rogers says:

    Here us an easy solution.

    Cut the subsidies and tax breaks for all forms if energy and let the chips of the free market fall where they may. Any rediculous regulations need to go as well.

    • Nicko2 says:

      What planet are you on? There is no free market, never has been. :)

      One thing is assured, wind, solar, wave, geothermal ect… all these technologies will continue experiencing rapid innovation and price reductions for decades to come.

  19. Flying Monkey says:

    Can a wind farm compete when the wind doesn’t blow? I’m sure all their customers will understand that there is no power since the isn’t blowing. I will just have to delay starting my dishwasher and doing the laundry….. ;)

    If the wind is 24/7, it is not a hard calculation to make. If it is intermittent how do they calculate whether it is competitive or not?

    • Wolf Richter says:

      That’s why there is something called the “grid.” Nuclear power plants are taken off line every 18 or 24 months for refueling and maintenance and stay off line for several months. Their customers are just fine – because of the “grid” which connects power generators and user in a region. So it’s not a problem for wind farms either.

  20. d says:

    Lots of people here bleating about when the wind dosent blow, and the sun dosent shine.

    That loony guy musk.

    People, should pay more attention to his batteries and solar roof tile ideas, with cars that recharge at night, from energy stored in his battery bank’s during the day as they were charged from his roof tiles.

    And also iron eddison batteries that are very proven and very suitable as storage banks in houses to store wind and solar energy.

    Many energy supply authority’s still have Iron eddison battery backups for themselves. Today.

    Exide brought and killed iron Eddison, to make Exide profitable. As there wasn’t enough lunch for both of them. NEVER forget that.

  21. Wayfar says:

    I think the idea of completely independent, off grid electricity generation is an interesting idea. The ability of each person, household, company etc to generate it’s own electricity according to its own needs. Work done by Musk as mentioned in the earlier post as well as wireless energy transmission research could work imo. No need for a costly grid. No need for subsidies.

  22. Alfred (Melbourne) says:

    Hi Wolf,

    Perhaps you should have a good look at this graph before believing (it is a religious thing) that “Renewable Energy” is a great idea:

    Energy Productivity: Millions of Tonnes of Oil Equivalent per Employee

    • Wolf Richter says:

      The kinds of nonsense arguments you guys drag out by their graying hairs from your dusty propaganda barn is just astounding.

      Look, everyone knows renewables aren’t going to replace oil and natural gas anytime soon. That’s wasn’t the point of the article. The article talked about wind power competing with coal, for crying out loud!

      In the US, coal has been getting whacked by natural gas for 20 years … look at the consumption data. Coal used to provide over 50% of power generation in the US. Now it’s down to 30%. Why? Two reasons:

      1. A technological invention of the 1990s, the combined cycle gas turbine power plant (look it up), whose thermal efficiency these days is around 65% versus coal’s stream turbine plant of about 30%+ In other words, you have to burn almost twice as many BTU from coal as from gas to get the same power output. So coal has a hard time competing on price. Also, these kinds of CCGT plants can be used efficiently for base power and peaking. Coal plants are mostly used for base power. So that’s another advantage gas-fired plants have over coal.

      2. The terribly cheap price of natgas in the US.

      All this is OLD HAT. That’s why coal miners have been declaring bankruptcy for years. It has nothing to do with environmental regulations (though they don’t help coal either).

      What the article is saying is that US wind power is now also encroaching on coal. This is in the US, with US conditions and prices, not in Australia, Germany, or Timbuktu. So spare me your stories from other parts of the world.

      And you know what? Whatever hoary stories you may drag out of your propaganda barn, smart business people, ranchers, and farmers from Texas to North Dakota have jumped into this wind-power business with both feet and are doing quite well, thank you!

      Everyone (except perhaps you) knows that a country like the US is going to have a diversified energy portfolio. Wind power is playing an increasingly large (though still fairly small) role, and coal’s role has been receding for TWO DECADES. Got that? That’s a fact borne out by the consumption numbers. Check them out. The EIA is a good source for them.

      • Derek says:

        Don’t worry, Wolf. Once the miners go under, or, heaven forbid, actually pay out the benefits and damages they owe just their workers, they won’t be able to pay for these bargain-basement trolls any more.

      • d says:


        There is an issue you need to research, regarding Dinosaurs, many were deaf with poor detail sight, and hunted/fed by sent and sight of movement.

        Intelligent fact presented logically, dont work. Particularly when the intended recipient, dosent want to hear.

        • Thor's Hammer says:


          Ugo Bardi recently posted a series of articles about the Dinosaur thought process and why it is impervious to logic and factual data.

        • d says:

          “Ugo Bardi recently posted”

          hopefully more than just you comprehended and got a laugh.

          Being serious

          “The problem is that there exists another side of science where scientists are beaming out exactly the opposite message of that of the need of making sacrifices. It is the side of the “gee-whiz science” or, maybe, “Santa Claus Science”, scientific research still operating along the optimistic ideas developed in the 1950s, at the time of the “space age” and the “atomic age”. The message that comes from this area is, “give us some money and we’ll invent some magic device that will solve all the problema.” It is a message that’s ringing more and more hollow and the public is starting to perceive that the scientists are making promises they can’t maintain. Not only the various scientific miracles that were promised are not materializing (say, nuclear fusion) but many pretended scientific revolutions are making things worse (say, shale oil). Still, many scientists keep making these promises and a certain section of society accepts – even requires – them.”

          How are they going to “Invent ” another “ice age”???

          Thats the only way you can stop the ice in Western Antarctica, all falling into the sea, and melting, raising sea levels by meters, everywhere. Human efforts may reduce the speed, but not the final result.


          Does p 45 actually know this, and take the position “we can’t stop it, so, why try”???.

          I am probably giving him to much credit, but it is a vague possibility, as Tillerson privately knows this is the truth, and has for a very long time.

          By the time Exxon/Tillerson knew, it was already to late. Which was around the time of the Ozone hole/CFC issues..

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