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Choice: A Novel Idea
Photo Credit: Harvey McDaniel.
In the latest dispatch from the Reality-Refuses-to-Conform-to-Narrative Files comes this bit of news from the WSJ:
Texas has added more wind-based generating capacity than any other state, with wind turbines accounting for 16% of electrical generating capacity as of April. Now Texas is anticipating a huge surge in solar power. […] In April, there was more than 19,000 megawatts of renewable capacity, according to the U.S. Department of Energy, cranking out enough power for nearly 4 million Texas homes.
Mind you, this is not a simple tale of the free market triumphing over statism: In addition to the generous federal subsidies, this partially came about through state mandates signed into law by George W. Bush and Rick Perry, and Texas residents will have to figure out how to deal with the significant grid-load problems that intermittent renewable energy sources pose. However, the same legislation that enacted those state mandates also performed a lot of trust-busting on Texas energy utilities, making things like this possible:
Residents of Houston currently can pick from 107 different rate plans offering 5% to 100% renew-able power. In general, they are willing to pay a bit more to go green. Top-rated Reliant, a unit of NRG Energy Inc. MMNRGMM, charges 7.1 cents a kilowatt-hour for the plan that’s all renew-able versus 5.9 cents for one that’s 5% green.
The upshot: While other states are struggling to meet their self-imposed green mandates, Texas has blown past its.
Imagine that: In the the state (rightly) most-associated with fossil fuels, people have embraced wind power not because their choices were restricted, but because they were opened.
Published in Economics
Tom, don’t give the Texans a bigger head than they already have!
I think that the choice offered the residents of Texas are so distorted by federal government subsidies that their choice to go green is a false one. If the real cost was presented to the consumer I think the numbers would look significantly worse.
I agree.
However, I am willing to give 1 and half cheers for the busting part. Without the subsidies, maybe it would still work.
Green energy is a upper-class luxury good – it’s not all that different from a Ferrari.
The good news is (usually) that innovations made in the luxury market move into the affordable market over time.
Whether innovations will be made in the face of market distortions in the energy sector remains to be seen.
It’s that darn environmental Kuznet’s Curve again:
Except my taxes don’t subsidize your Ferrari, so that’s pretty different.
Well if I’m a corrupt government official or profiting off my insider status technically they do.
But it’s not like rules that forbid people from unfairly enriching themselves don’t apply to Congress right?
Texas’s energy bidness has long had powerful connections in D.C. To go with its world class lawyers and lobbyists.
The wind farms of West Texas are the most hideous landscape I’ve ever seen. Maybe because I’ve never visited Chernobyl…
There’s no such thing as a free (energy) lunch. That’s the problem with this “green” movement. All the costs are hidden to the consumer. The subsidies come out of their pockets in taxes and the people living in rural parts of the country have to put up with the (nature-destroying) atrocities that are wind farms.
Seriously, I’m convinced wind farms mess with your brains (is it the sound?). When the end of the world comes down, I’ll be the mad woman stringing sticks of dynamite around the bases of those turbines. Hate ’em with a burning passion. Big lies, all of ’em.
Actually Exor who owns Ferrari also owns Fiat which received massive subsidies during the auto-bailout due to its takeover of Chrystler.
I agree. But it helps me swallow “green” subsidies knowing lefties send much of their subsidy money and jobs to wind rich red states like TX, KS, and the Dakotas. I suspect thats why Republicans in Congress agreed not to shut off the subsidy. If left wing America is willing to subsidize red states to provide all their wind power…..why stop ’em?
Not just Federal government subsidies. Texas has custom built out its transmission system to enable wind development. The wind stampede in Texas was started with a state mandate. Texas’ fairly unique situation is a single transmission system separate from the rest of the country, and the relative proximity of the high winds along the 100th meridian to large population centers.
Which has ended up being a bad deal for them, right? I don’t think that subsidy is reflected in the price you pay for your Ferrari, though I confess I haven’t examined the issue. Those wind prices are roughly about 30% lower than they would otherwise be absent federal tax subsidies.
Nonsense. Everything’s bigger in Texas.
Everything.
Eric Hines
Emphasis added.
We still have lots of open spaces and lots of wind. [ahem]
Also, a significant fraction of our wind energy is intended for sale to…California. It’ll be an interesting sale, too, since California has/is building a significant solar power farm, but the pseudo-environmentalists are blocking construction of the power lines that would carry that solar-generated energy to the originally targeted cities.
Eric Hines
I commute on the light rail in Mpls. It is very convenient. A form of economic insanity, the fares can’t even cover operating costs. I occasionally thank my lefty partners for their generosity in subsidizing my commute. Most of them live out in the ‘burbs. I am hopeful it eases their pain when they are stuck in traffic because the state hasn’t built new traffic lanes in eons to know they are subsidizing my delay free (except when some moron decides to challenge the train’s right-of-way; oh and except when it snows (but that wouldn’t be a problem in Minnesota)) 15 minute reading commute.
Maybe it would help if you turned off all those fans. (Paraphrase of an actual public comment at a permit hearing for a wind farm.)
It would certainly help all the eagles and other birds that try to fly through them.
Eric Hines
Isaac Smith: Except my taxes don’t subsidize your Ferrari, so that’s pretty different.
If the example used had been a Tesla, your taxes certainly do subsidize it.
For the 10 years or so before I retired, I worked in systems designed to monitor and control batteries – Lithium Ion in particular. The amount of Federal subsidies greatly distorted what effort was put into which battery technologies. Although they were supposedly picking “winners”, my experience is that virtually every company with large government subsidies has gone belly up. A123 (in Boston) is a good example. China picked up the remains at a firesale price.
No argument there – so the next time the guy in our building unplugs his Tesla, am I justified grabbing the keys and taking it for a spin? Hey- I helped pay for it!!
I once talked to a guy who worked for a utility and had the wonderful job of handling complaints. They put in an experimental turbine (this was about 15 years ago) and a couple years later he got a call from a pissed off landowner –
“You lying [COC]s said those things were going to kill some of the Canada Geese!”
“Yes sir. Our projections were that it could kill one or two a year, but we haven’t killed any yet, as far as we know.”
“I know. That’s why I’m pissed! It was worth putting up with the [COC] things when you said they would kill some [COC] Canada [COC] Geese. Now I’ve got to put up with the [COC] machines and I’ve still got goose [COC] all over my yard.”
There’s just no pleasing some people.
My defense contractor employer did considerable business with TRADOC in Detroit those years ago. The base was inundated with the protected animals known as geese. While they made really good watch birds–they’re surprisingly territorial–there were lots of them and they did their business where and when ever they took a notion to. You couldn’t walk or drive without getting into all that goose [CoC].
Eric Hines
Me, too. Like school vouchers, or the market portions of Medicare Part D, or workfare instead of the WPA, this takes a 90% government dominated activity and turns it into a 70%, to invent some numbers. Whether the portion was mandated or not, the subsidies would be a problem. As it is, Texans have one problem to solve (subsidies), whereas you and I in California and DC have two problems (subsidies and mandates). Obviously, I could go all Spanish Inquisition on you here (subsidies, mandates and environmental regulations….. You and I have three problems; subsidies, mandates, environmental regulations, and labor regulations), but, as with the invented numbers the direction is the point. Is there a way in which the Texan solution appears inferior to you to the California solution?
Okay, maybe it’s a matter of reduced mandates rather than removed; one should never take Texan claims of radical freedom too much at face value. ;-)
This made my seagull hating wife smile more at the thought of offshore wind farms than I’ve seen before.
Every time I drive I-84 along the Columbia River in Oregon toward Portland and see the ever-multiplying wind turbines towering above me, I gnash my teeth in frustrated rage. You see, these bird killing monstrosities are being built in my backyard —the windswept, wild hills of eastern Oregon— by the politically powerful Portland leftists as religious shrines to appease their anthropogenic climate change god. To make matters worse, I am forced to participate in their worship by paying taxes to subsidize these horrid pustules spreading over our land.
Goodness – I hate the subsidies, but I think the turbines are kinda pretty. But I think a refinery at night is beautiful too – a testament to man’s ingenuity and lots of blinking lights.
Yeah, I confess I’ve never understood some folks’ aesthetic hatred for turbines (Dennis Prager famously loathes them). It often depends on setting and some other choices, but I often find them pretty neat-looking.
Apropos for this topic, Buffett is piling more chips into the game: http://elpc.org/issues/clean-energy/news-elpc-iowa-environmental-council-commend-approval-of-wind-xi/
On a back of the envelope basis, when fully built this represents $180 million in tax credits for Buffett per year, or roughly $1.8 billion over the first ten years of the project. That does not include the benefits of accelerated depreciation. If Buffett is so concerned about tax equity, perhaps he’ll decline to claim all of his credits?
No, I’m not holding my breath either.
I kind of like the way they look, too, but I’ve learned to like a lot of things. I’ve taken photos on my bike rides… The main thing that lessens my enjoyment of them is the subsidies.
Someday, when they get taken down, the conservatives among us will wail and gnash their teeth at the destruction of this American cultural icon.