So you want to make a profit by selling what you produce. What do you do? Sell it for more than it costs you.
But that’s so old fashioned!
Nowadays, you just get into the wind industry. You find state or local policymakers eager to virtue signal by supporting your renewable-, zero-carbon energy tech. And you get them to sign a contract that guarantees you get positive payment for your product even when its market price is negative.
Rate- and taxpayers in Georgetown, TX, a small town outside the People’s Republic of Austin, are feelin’ the burn of that nifty arrangement.
The Texas Public Policy Foundation’s Chuck DeVore lays out the gory details in “Texas Taxpayers Pay The French Government For Wind Power And Then Pay The Grid To Take It.”
At least 57 times in 2017, and many more last year, Georgetown’s residents paid EDF, a company owned 84.5% by the government of France, around 6 cents per kilowatt hour for electricity produced in the middle of the night when demand was low—so low, in fact, that because of tax incentives and government subsidies, the price for power was negative.
Put simply: Texas taxpayers paid the French government for power and then, to add insult to injury, paid the grid to take the excess power off their hands.
How did that happen?
Georgetown contracted with Électricité de France (EDF), of which the French government owns almost 85%, to buy electricity from a wind factory (they’re not farms, you know!) EDF owns. The contract requires Georgetown to pay the same rate whatever the time of day it pulls the power.
But wind varies, and sometimes it blows best when power is least needed. At those times, Georgetown must buy power, for 6 cents per kilowatt hour, even though Georgetown’s grid doesn’t need it—and neither does any other. At such times, the grid-market price of inbound electricity can be negative.
So Georgetown pays 6 cents/kWh when the actual price is negative. And then, because it doesn’t need the electricity, it pays the wider grid to take that electricity off its hands.
Result? Higher electricity costs for Georgetown residents, a $13-a-month rate hike just approved, and “$20 million in losses on the electricity market over the past four years.”
As DeVore explains,
Between the federal Production Tax Credit (available through the end of this year for wind facilities that started construction by December 31), Investment Tax Credit, Obama-era stimulus funds, and Texas property tax abatements, wind producers make so much money from government subsidies that they make money even if they have to pay others to take their power.
On top of all that, the unpredictability of wind (and solar likewise) means the more power a grid gets from them, the less stable it becomes, leading to brownouts and blackouts—and the more it must rely on backup from coal or natural gas plants, which means higher costs.
Remember all this the next time somebody tells you what a great deal wind power is because, after all, “Wind is free to everybody!”
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