Quick Take: Bioenergy entrepreneur S. Michael Holly has posted on Energy Trends Insider to claim that special interests including electric power utilities and the wind industry are “misrepresenting wind power costs.” As a result, he claims, they are wrongfully rejecting renewables such as hydropower, geothermal and bioenergy that are actually lower in costs. – By Jesse Berst

Holly cites as evidence a Wall Street Journal editorial by Bill Ritter, Director of the Center for the New Energy Economy at Colorado State University, who said that “long-term contracts for wind energy are being signed by utilities in several states in the range of 3 cents per kWh over 20 years.” He also criticizes a recent release by Xcel Energy (America’s top producer of wind-generated electricity) that declares “wind power is simply the cheapest resource.”

Holly asserts that wind electricity outside the U.S. costs about 10 cents (in the form of feed-in tariffs). Capital costs account for about 93% of that. The difference in the U.S. cost can be explained by tax write-offs “targeted to big companies and the rich that cover half to two-thirds of the capital costs of windmills.”

He cites numbers in an attempt to prove that wind power has been subsidized 3-10 cents. He further claims that electricity rates have been increasing significantly in regions with high wind penetration (5-10%), due to extra transmission and integration costs (that have often not been accurately reported by utilities).

He also believes that utilities have not been accurately reporting extra transmission and integration costs. He cites a study by Lawrence Berkeley National Laboratory that found capital costs for wind transmission lines are triple those of other generation sources due to wind’s lower capacity factor (about 30% compared to about 90% for baseload plants). In other words, when you build a wind line it only gets used about 30% of the time.

Are utilities breaking the law as well?

Holly reports that “utility monopolies have violated state laws… by misrepresenting integration costs while petitioning regulators for the purchase of wind power.” Grid-level system costs include grid infrastructure, short-term balancing, intermittent electricity access, network congestion and instability.

What’s more, Holly says, costs are increasing for baseload plants, including idled capacity and even an inability to make debt payments. Requiring baseload power plants to ramp up and down and operate at sub-optimal levels (to adjust for intermittent wind) increases maintenance costs and reduces fuel efficiency.

He concludes by asserting that the U.S. is allowing utilities to use this misrepresentation (that they can get wind power at 3-4 cents) to reject the purchase of other lower-cost renewable energies, such as the bioenergy produced by his company.

Jesse Berst is the founder and Chief Analyst of SGN and Chairman of the Smart Cities Council, an industry coalition.