By Oliver Marc Hartwich 23 Aug 2006 at 08:08 AM EDT
CAPE TOWN (Business Day) -- Cape Town has, with much fanfare, just embraced wind power, that green panacea of sustainable and clean energy. But we are most unlikely to hear of its cost, its inefficiency and, indeed, its damage to the environment. We will hear that wind power helps curb our greenhouse-gas emissions, makes the country less dependent on fossil fuels and energy imports and — the icing on the cake — also creates jobs. Surely this is the solution to many of the world’s biggest problems? To see if these alleged benefits actually stand up to closer scrutiny, let us look at a country held up as a shining example: Germany.
Since the 1980s, Germany’s government has promoted and subsidised wind energy with wide political support. In 1991, all parties backed a law forcing utilities to buy electricity from wind-energy firms at 90% of the average retail price, making suppliers and consumers pay for the growth of wind farms.
Building wind farms became popular among farmers seeking extra income from pastures and among underutilised shipyards with skilled labour and trying to diversify. Many schemes were in underdeveloped regions, so many local politicians backed them. Later, investors in wind energy could also deduct investments against tax, making the deal attractive for high earners.
So wind energy came to be promoted by a wide range of people who could hide their special interests behind the screen of green slogans.
Incentives improved further with the Renewable Energies Act in 2000. This abolished the link to retail energy prices, which had fallen thanks to liberalisation of the electricity market, and replaced it with a guaranteed price of €0.091/kWh (US 11.6 cents) for wind farms, a good three times the German average production cost of electricity of €0.025 (US 3.2 cents) to €0.03 (US 3.8 cents).
Germany produces about 3.1% of its electricity from wind energy, but this comes at the cost of an annual subsidy of €4 billion (US$5.13 billion) or so. But what about the alleged benefits for the economy and the environment? It is often claimed wind power has created 45,000 jobs in Germany. But with a large subsidy anyone can create jobs, although, at more than €80,000 (US$102,000) a job a year, it would be cheaper to send workers on permanent vacation in a tropical paradise.
Wind farms actually lower employment, thanks to higher energy prices for the economy, according to the Bremer Energie Institut. If the economic effects were not bad enough, it also seems ecological benefits of German wind energy exist only in the imagination of its supporters. First, the wind in Germany is unreliable, so wind generators operate at full capacity for about 1,400 hours a year on average – just more than 58 days’ worth.
Britain, claiming better wind, still only managed to reach a third of its wind-power capacity in the very windy year of 1998, according to its trade and industry department. So every wind turbine still needs full conventional energy backup.
Even if wind power did decrease the amount of carbon emissions from conventional electricity firms, those utilities could sell on those carbon savings to anyone else: “carbon emission trading” gives companies an emission allowance, and allows them to buy or sell it, locally or internationally.
A 2004 report for Germany’s federal economics ministry showed carbon reduction would be zero, at the considerable cost of higher energy prices.
Another concealed environmental problem is carbon emissions from manufacturing turbines. The wind sector is now the second-biggest consumer of steel, after car makers, in Germany.
At lower wind speeds you need more than 10 tonnes of iron for a given output, compared with about two tons for coal, one for gas and half a ton for nuclear.
Germany’s wind energy promotion has been extremely expensive, and has probably destroyed jobs. Its ecological benefits under carbon trading are nonexistent, and it needs full conventional backup.
The German experience does not prove that wind energy can never be viable, but it does show that state interference with the market can create enormous economic and ecological distortions.
If wind energy really is the energy of the future it must prove itself in the market without state subsidies, but this has not yet happened anywhere.
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