Wind Energy: Policies and Recommendations




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Maggi Sliwinski

Policy Brief

Environmental Policy

Professor Craig A. Rimmerman

Hobart and William Smith Colleges

Wind Energy: Policies and Recommendations

Introduction

Wind energy has been emphasized as the most viable option for producing a significant amount of electricity from renewable sources in the United States (Motavalli 2005a). Wind energy is the fastest growing source of renewable energy in the US: it grew from 3,288 million kilowatt-hours to 10,354 million kilowatt-hours between 1997 and 2002 (Menz 2005). The wind industry currently accounts for 3% of all renewable electricity generated, hydropower being most of the other 97% (Menz 2005). The major question in developing wind energy in the US is the method of implementation. Electricity from wind can be created through either industrial (very large) turbines or residential (small) turbines. There is major controversy concerning the development of industrial wind farms, which are usually groupings of 20 or more turbines, as can be seen on web sites such as National Wind Watch (www.wind-watch.org). However, industrial development of wind farms is the most common route for companies that want to develop wind energy, mainly because of the policies and incentives that have been put in place by state and federal governments (Moss 2005). Residential wind power is small-scale wind-capturing technology to supply energy to single homes and farms (Clark 2006). This type of wind energy also has incentives, but they are not as lucrative for large companies (DSIRE 2007). Wind energy is considered a “green” energy, meaning that it supposedly has very few to no emissions and its benefits for the environment outweigh its costs. In following this standard, the most viable way of implementing wind energy production is to prevent harm to the environment from installation of the turbine, installation of infrastructure required to transport the electricity produced, and creation of the turbine itself and its supporting structures. Further, the turbines should not cause harm to wildlife or humans and they should be efficient at reducing carbon dioxide emissions. Each of these factors must be present for wind energy to be a viable source of energy for the nation. Which method of implementation, industrial turbines, residential turbines, or a combination of both, would best serve this purpose? To answer this question, I will provide a brief history of wind power, look at policies concerning the development of both industrial and residential wind power, and review wind energy’s environmental and human impacts. Through this analysis, the conclusion that wind energy, as it is currently being developed in the United States, will not reduce carbon dioxide emissions, our dependence on foreign oil, or on dependence of dirtier sources such as coal and nuclear, will be clear. Only an off-grid system of residential turbines will help reduce our energy imports and carbon emissions. Holding up the commercial wind industry with tax breaks and subsidies will only hurt our environmental future.


Brief History

Wind has been a source of energy for humans for nearly 7000 years; the first major use of wind energy was to propel ships and boats by their sails (Vogel 2005). Windmills were the first mechanical device for capturing wind energy and turning it into a form useful for humans; these were developed between 500 and 900 AD in Persia and they were used to pump water for farmers or to turn machines to grind grains (Motavalli 2005a). Between 1850 and 1970 millions of smaller windmills were built in the US to pump water, but these became outdated with the arrival of electricity in rural areas (Motavalli 2005a). The first turbines for creating a commercial supply of energy were developed and built in Denmark in 1890; however, with the expansion of electrical grid systems, wind energy became obsolete (Vogel 2005). Wind energy began to make a comeback in the United States and Europe in the 1970s and 1980s when Americans realized the importance of domestic energy sources after the oil crisis. Americans also began to realize that fossil fuels may harm the environment. This determination for clean domestic energy began to fade in the 1990s when oil prices fell (Vogel 2005). Today’s wind energy is mostly industrial, with some residential, and is supported by a number of different policies to encourage research, development, and installation (National Wind Watch 2007). These policies, both past and current, are presented in the next section.


Energy Policies in the US

There are a number of methods to support “green” energy through policy in the United States. These methods of setting up policy objectives include “target setting, choice of instrument (i.e., economic, fiscal, regulatory, pros and cons), and procedures to minimize risks and maximize effectiveness” (Gan et al. 2007). There are two general categories of green energy: green as in reducing greenhouse gas emissions, and green as in providing energy security to the population (Gan et al. 2007). With these in mind, the major developments in renewable energy policy will be described below.

The first major push for developing renewable “green” energies in the United States came during the oil crises of 1973-1974 and 1978-1979 (Guey-Lee 1998). At this time, the purpose of the laws implemented was to provide energy security for the nation. One of the major laws supporting the development of renewable energies during this time was the Public Utility Regulatory Policies Act of 1978 (PURPA) (Menz 2005). The main tenet in PURPA that supported the renewables industry was that electric utilities (e.g., NYSEG) had to purchase the energy made by smaller-scale non-utility generators such as wind turbines (Hirsh 1999). After lobbyists and politicians had provided their input on the bill, the final version had voluntary standards on rate settings for the states, but there were mandatory regulations imposed on states for purchasing energy produced by non-utilities (Hirsh 1999). Wind turbines were categorized as “qualifying small power production facilities” under PURPA (Hirsh 1999) and were therefore guaranteed to have their power purchased. Within the law were many provisions that helped to support renewable energies: states would determine payments made to non-utilities by utilities, and non-utilities generating less than 30 megawatts (MW) were exempt from the Public Utility Holding Company Act and the Federal Power Act (Hirsh 1999). Another stipulation under PURPA was that these small production facilities could not be more than 50% owned by an existing electric utility. The Public Utility Regulatory Policies Act helped to establish a market for wind power that hadn’t been there before (Guey-Lee 1998). In California especially (where there was an unconventional governor in office), the non-utilities made a lot of headway because the payments to them were determined based on avoided-costs (costs avoided from not having to use as much expensive oil or other electricity source) and were guaranteed by the state government for ten years (Hirsh 1999). Avoided-cost payments helped to increase the efficiency of certain technologies, including wind turbines, because the more energy that could be created per turbine the higher the avoided costs of conventional electricity generation would be.

The result of PURPA was an explosion of wind power and other renewable energy projects. However, the program was so successful that it eventually overwhelmed the system in that it became too expensive to continue paying out the promised allocations (Hewson 2007). For this reason, the Public Utility Regulatory Policies Act has “fallen by the wayside” and other incentives have moved in to take its place (Hewson 2007). These other incentives are discussed next.

In the early 1980s, investment tax credits from both Federal and State governments were set up. In California in 1983, a tax credit was set up to benefit new investment in wind farms. The incentive in California was a 25% federal investment tax credit and a 25% state investment tax credit for new investment (Loiter and Norberg-Bohm 1999). In 1984 and 1985, investment in wind farms in California soared. These investment tax credits may not have been appropriate for wind power development because they resulted in a lot of capacity1 being installed, but the actual production of electricity was much less because the technology was not improving to create more efficient turbines (Guey-Lee 1998). Investment tax credits are no longer used in any state (DSIRE 2007).

The Energy Policy Act of 1992 helped to bolster renewable energies in the market. Production tax credits (also known as federal renewable energy production incentives) were instituted with the passing of this act. The federal government regulated the production tax credit: it provided 1.5 cents per kilowatt-hour of energy produced to new qualifying facilities (i.e., wind farms) for the first ten years of electricity generation (Menz 2005). This originally applied to new facilities coming on-line before June 1999 (Guey-Lee 1998) and has been extended each time it was about to expire (DSIRE 2007). The payment is currently set at 2.0 cents per kilowatt hour for wind energy production. This type of incentive is important because it provides necessary resources for the development of wind energy, but it also provides an incentive to improve turbine technology to get more energy out of each turbine installed. In 1996, the Federal Energy Regulatory Commission (FERC) realized the objective of the Energy Policy Act of 1992 by creating regulations that stated 'open and equal access' to electricity transmission lines for all electricity producers (Menz, 2005). This began the process of allowing customers to choose their energy production method and reduced costs to developers who would no longer have to supply major infrastructure for erecting a wind farm.

Because PURPA was heavily influenced by lobbyists and politicians, major regulations that Jimmy Carter and his administration wanted left to the federal government ended up in the hands of state governments. For this reason, state governments have a large number of regulations and incentives regarding renewable energy and wind energy in particular. These different programs and incentives will be discussed below.

Net-metering is one method that is used to generate interest in installing residential wind energy. Net-metering is the process of keeping track of the extra wind electricity that is fed back into the grid by using a two-way meter (Menz, 2005). The person owning the wind generation facility is then reimbursed by the state (often from the system benefits funds, which will be discussed below (DSIRE 2007). Each state has different restrictions on the size of the turbine permitted for net-metering. For example, New York State limits net-metering benefits to 25-kilowatt residential turbines and 125-kilowatt farm-based wind turbines. California limits the size of the system to 1 megawatt and credits the producer on the subsequent electricity bill (DSIRE 2007). Net-metering provides retail prices for the extra energy generated by small-scale wind generators, while large-scale generators (i.e., wind farms) do not get benefits from net-metering (Hewson 2007). However, large-scale facilities do generate profits from a number of other incentives provided by state governments.

Numerous tax incentives are provided to companies owning large-scale wind production facilities. One of these is the ability to 'write off' the investment on their income tax (Menz 2005). This allows the company to immediately begin to be repaid for the investment that was made in wind energy. Further, states often provide accelerated depreciation for investment in wind energy (Bird et al. 2005). Because it is a capital investment, it cannot be counted as an expense on tax forms. With accelerated depreciation, however, a portion of the investment can be written off. For conventional power plants such as natural gas, the period of the accelerated depreciation is generally thirty years. This situation is improved for investment in large-scale wind generating facilities (which, again, do not benefit from net-metering). Accelerated depreciation for wind energy has a typical period of only five years (Hewson 2007). For the natural gas electricity plant, only one thirtieth of the investment can be written off each year for thirty years, while for the wind farm one fifth of the investment is written off each year for five years. Investing in wind development is much more lucrative for companies because of this, and it is much less risky. Even with these two major incentives for investing in wind energy development (tax write-offs and accelerated depreciation), there are still more incentives in many states.

To encourage the installation of more renewable energy systems, many states provide low-interest loans or rebates to residents purchasing renewable energy systems (such as solar or wind) for their homes. In New York State, loans up to $20,000 for residential wind systems and $1 million for multifamily wind systems are awarded at very low interest rates (DSIRE 2007). However, a study by Menz et al. (2007) found that low-interest loan programs did not make a major difference in the purchasing of wind and other renewable energy systems.

System benefits charges (also known as Public Benefit Funds) were instituted in the late 1990s with the restructuring of the energy industry. These charges are extra payments on the consumer’s electricity bill that go into a fund to support the renewable energy industry (Menz 2005 and Bird et al. 2005). System benefit funds can be used in a variety of ways: as financial incentives to help promote large-scale renewable energy projects (wind being the most favored) or as support for customer choice and green marketing programs, among others (Menz 2005). System benefits funds currently exist in fifteen states and the District of Columbia and will have a total of four billion dollars accrued by 2017 (DSIRE 2007).

Thirty-three states have market-based initiatives that have resulted in growth of installed wind capacity. The utilities in these states offered customers the option of purchasing 'green' energy on their monthly bill. Customers in twelve states are able to purchase competitively priced green energy. The authors believe that these specific incentives have resulted in over 980 megawatts of newly-installed renewable capacity (including solar and wind) (Menz 2005).

By 2003, fifteen states had implemented Renewable Portfolio Standards (RPS). These are laws that require an increasing amount of electricity to come from renewable resources with an aim at a certain percentage by a specified date (Menz 2005). Each state’s RPS is different. For example, New York has an RPS stipulating that by 2013, 24% of the electricity in the state will come from renewable resources (including hydropower), with a system benefits fund in place to support more development. California has an RPS stipulating that 20% of the electricity come from renewable resources by 2017; California also has a system benefits fund in place (Bird et al. 2005). According to Loiter and Norberg-Bohm (1999), the development of new technologies must be supported by long-term markets and support for creating more efficient turbines must be through specific incentives. To this end, the authors support a Renewable Portfolio Standard. The RPS gets away from providing long-term subsidies to the wind industry, but it also gets away from short-term subsidies that are ineffective because they cause boom-and-bust cycles of investment (Bird et al. 2005).

Kansas does not have an RPS in place, but they do have another incentive: some states encourage wind farm installation by offering decreased property taxes or property tax exemption (Bird et al. 2005), which is important because wind facilities require a lot of acreage (Guey-Lee 1998). This is a problematic incentive because it allows a wind energy company to be operating on land in a town and not be required to pay the town property taxes.

There are numerous incentives for wind energy development in different states. Without going into detail, these include, but are not limited to, grant programs, rebate programs, sales tax exemptions, industry recruitment incentives, etc. (DSIRE 2007). Each state uses a different combination of incentives based on its needs and the perceived necessity for renewable energies.

Another method of increasing the amount of renewable electricity available and ease of using this electricity comes from research and development funding. The most ambitious federal wind energy research project was the MOD Program, which was administered through NASA and the Department of Energy. The purpose of the program was to provide a technologically advanced wind turbine capable of producing electricity that was cost-competitive with conventional sources of electricity (i.e,. coal and natural gas) (Loiter and Norberg-Bohm 1999). This program spent 200 to 300 million dollars on turbine development during the 1970s (Loiter and Norberg-Bohm 1999). The MOD program developed turbines using the expertise of NASA scientists, resulting in turbines that were better suited for flight than for use as major electricity providers (Loiter and Norberg-Bohm 1999). The project administrators also used a variety of indicators that pointed them in the direction of building 3-megawatt turbines. The indicators used, however, were not appropriate for the United States wind industry and these large turbines have never been used since their development (Loiter and Norberg-Bohm 1999). The project wasn’t very successful in that it did not provide the turbines used by the industry. It did, however, provide a large amount of data on technology, wind resources, and responses of turbines to wind and variability.

Luckily for the renewables industry, the MOD project was not the only research project pursued by the federal government. The SERI project (later renamed the National Renewable Energy Laboratory) carried out research during the 1980s on wind turbine design, including blade shape and materials (Loiter and Norberg-Bohm 1999). The National Renewable Energy Laboratory (NREL) created the National Wind Technology Center in 1994, which spurred renewed interest in developing modern, cost-effective turbines. The NREL also created the Advanced Wind Turbine program to support manufacturers in developing and producing new turbine technology. However, none of the turbines developed under this program have received commercial success (Loiter and Norberg-Bohm 1999). States also have an interest in pursuing research and development of wind energy and therefore provide incentives. Nearly half of all states have a grant program to fund research. For instance, the New York State Energy Research and Development Authority (NYSERDA) has a grant program that focuses on product and technology development rather than installation of new capacity (DSIRE 2007). The state of Iowa has a similar program managed through the Iowa Energy Center (DSIRE 2007). Funds for these two programs are granted or solicited.

Another issue with wind energy development comes at the local level when deciding where to site a wind farm. Siting policies for wind farms are most commonly left to the localities being affected and there are likely hundreds of possible policies. The town board will generally consider the issues relevant to siting and will make a recommendation based on the town’s needs and future plans (Downarowicz et al. 2006). The company also provides an environmental impact statement during the planning stages of a wind farm (Horizon Wind Energy 2005).


Other Policies

Countries in Europe often use different methods of supporting the development of renewable energies than are used in the United States. One of the major supports for continued installation of wind energy are feed-in laws. These are used in Germany, Denmark, Spain, and Italy:

The feed-in tariff scheme involves an obligation on the part of electric utilities to purchase the electricity produced by renewable energy producers in their service area at a tariff determined by the public authorities and guaranteed for a specified period of time (generally about 15 years). (Menanteau et al. 2003)
In this system, projects with the lowest production costs are favored, and the funding for the program is gathered through cross-subsidies among all electricity users, by taxes, or as extra costs to the consumer who decides to purchase “green” energy (Menanteau et al. 2003). Feed-in tariffs are easy to implement from an administrative standpoint, but they are costly.

In the United Kingdom and France, competitive bidding is another process used to support wind energy development. In this system, the regulator sets an amount of the electricity market that must be produced through renewable sources, and then renewable producers compete to allocate the set amount. Utilities are then obligated to purchase the produced electricity (Menanteau et al. 2003). A major advantage of this system is that the costs can be controlled better by the government.

In the Netherlands, an “ecotax” was instituted to support green energy. The tax was begun in 1996 and involved taxing small- and medium-scale energy users. It was designed so that green energies (wind, solar, etc.) were exempt from the tax, thus encouraging people to purchase more green energy (Gan et al. 2007). Also in the Netherlands was a green label system that was voluntarily set up by the energy industry in 1998. “The green electricity price under the label system consisted of a small feed-in tariff, the green label price, and a production subsidy” (Gan et al. 2007). Eventually the green label system was replaced by the trading of green certificates (Gan et al. 2007).

With research and development of new turbine technologies (both through public and private spheres), the cost of generating electricity through wind turbines began to come down. However, with the removal of tax incentives and long-term contracts (mainly in California), investment in wind energy began to decrease because it was not truly competitive with conventional sources of electricity (Loiter and Norberg-Bohm 1999). Further, there was an unexpected decrease in energy prices due to the decreasing prices of imported oil and increasing supplies of domestic energy sources (such as coal), so the perceived need for continuing to develop alternative energy sources declined (Loiter and Norberg-Bohm 1999). Further supporting this notion was the knowledge that coal and natural gas technologies were becoming less environmentally harmful (Menz 2005).


Problems with Wind

According to the American Wind Energy Association (AWEA), “Wind power can provide a large, rapid, and cost-effective part of the solution to global warming,” (AWEA 2007b). It has also been touted as the most environmentally benign energy source (Moss 2005). Yet there are a number of hazards that must be considered before recommending an implementation strategy for any policies supporting wind energy development.

First, there is a concern regarding net-metering and the reliability of wind power as an electricity source. There has been concern over “the safety of owner-operated windmills and their effect upon system reliability,” as was stated during the Wind Energy Conference (Deixler 1980). Tom Hewson of Energy Ventures Analysis, Inc., suggests that net-metering will not be a major problem because it only happens on a small scale and will continue that way because of state regulations (Hewson 2007). However, the issue of system reliability becomes more prominent when considering medium- and large-scale wind developments, such as the wind farms that are being constructed in many areas across the United States. For instance, the Idaho Power Company requested a temporary suspension of the law requiring them to purchase the energy created by wind farms of 10 megawatts or less so that they could study its impacts on the stability of the grid, the added costs stemming from intermittent wind resources, and the fairness of the price of electricity from wind facilities (Idaho Power Company 2005). In the same press release announcing the request for temporary suspension was the following:

"Because the output from wind energy projects can quickly and unexpectedly drop due to weather-related changes, the company must have other power generating resources on standby or in reserve in order to replace the power lost under such circumstances. As the amount of wind-supplied energy grows, the demand for standby or reserve supplies must also be increased. (2005)


This statement gets at the single-most important misconception about developing commercial wind energy. Wind energy does not offer a choice between building a wind plant or building a natural gas or coal fired power plant, and it is not even a choice between having one or the other running. As stated above, these power plants must be running on standby or reserve in order to ramp up immediately in case the wind dies. These plants are still emitting carbon dioxide because wind turbines rely on the grid and conventional electricity producers for backup (Lohan 2007). In Alberta, Canada, officials stated that their grid system will not be able to handle more than 900 megawatts of wind capacity because of its unreliability (CBCNews 2006).

Another issue with wind turbines is that their output varies with the wind speed. So although a turbine's capacity may be, say, 1 megawatt, its actual output would typically average 35% of that or less (Golob and Brus 1993). In order to make the most effective turbines, a couple of simple laws must be followed. First, wind speeds increase as you get higher off the ground and energy production from the wind increases as a cube of the wind’s speed. Turbines that are built very tall are able to produce more electricity. Second, “power-generating capacity increases in proportion to the square of the rotor’s diameter” (Golob and Brus 1993, page 134). So the longer the blades, the more electricity is produced. These are both reasons that industrial turbines have grown in size. The best way to make the most electricity is to be tall and have a large diameter. However, multimegawatt turbines (greater than 1 megawatt and very tall) were thought to lack cost-effectiveness and energy experts predicted that they would not be used very much (Golob and Brus 1993). With the incentives available for production tax credits, however, companies such as Goldman-Sachs have invested millions in large-scale wind energy and have strived to use bigger turbines for a better return (Perin 2005 and Schleede 2005). This has resulted in residential turbines falling under the radar.

Another major problem with large-scale industrial wind power is the threat of noise pollution. It is completely possible to stand underneath an operating turbine and speak in a natural voice (Pimentel 2002), but there is more to it than just noise of the same frequency as our voices. Large turbines also create low-frequency noise, and its travel is not prevented by walls of houses or other structures and can cause objects to rattle and vibrate (Berglund et al. 1996). Low-frequency noise is “the superpower of the frequency range:” It is capable of traveling long distances without diminution, ear protection is ineffective at this frequency, and it is able to resonate within the human body. Low-frequency noise has been shown to have ill physical, physiological, and psychological effects on humans (Berglund et al.,1996 and Pierpont 2006). Berglund et al. specifically states, “the data on wind turbines indicate that the predominance of low-frequency noise is of particular concern for communities living close to wind turbines” (1996). This problem was first discovered in Boone, NC, when a large wind generator had to be shut down because of the low-frequency sound vibrations that it was causing (Deixler 1980).

Another major problem with wind energy is that large turbines kill birds and bats. Many advocates like to trivialize this problem by comparing it with the bird kills caused by house cats and man-made structures such as cell towers, power lines, and skyscrapers (Grubb and Meyer 1993). But it's particularly the migrating birds and also raptors that fall to industrial wind turbines. And there are many more problems with commercial wind power development, including erosion that happens when construction is taking place, habitat fragmentation when fields and forests are cut to make room for turbines and access roads, and current flowing from the machines, if not properly grounded, which they often aren't, that has the ability to harm livestock and people (Francis 2007). Finally, developers state that hundreds (or even thousands, in some cases) of jobs will be created through the construction of a wind farm (Motavalli 2005b). However, “an entire wind farm can be controlled by a single laptop,” removing most prospects for jobs after the project is finished (Vogel 2005).


Recommendations

It is important to have government intervention to promote the economic development of an up-and-coming technology in the energy sector and to prevent it from directly competing with pre-existing conventional energy sources (Menanteau et al. 2003). One of the major advantages of clean, renewable energy is that it protects the air quality and climate stability, which are public goods (Menanteau et al. 2003). However, it is also important to make considerations for the environment, people’s health, and their property rights. As was seen in the “Problems with Wind” section, commercial wind development is rarely capable of protecting the climate and the environment. Wind energy in Denmark has not met the stipulations for successful use of the technology as outlined in the opening paragraphs, and their wind energy sector is mainly industrial (White 2004). Lessons can be learned from Denmark’s wind energy situation. There are policies that can be implemented to encourage the wind industry to actually help the environment and climate. Consumers and citizens can act to help achieve the same goals that the wind industry extols as its main purpose: to reduce carbon dioxide emissions and provide a secure domestic energy future (Motavalli 2005b).

Tim Flannery provides a few ideas that would actually reduce carbon dioxide emissions and provide a stable domestic energy source in his book The Weather Makers (2005). One of these ideas is to use wind energy to pump compressed air into the ground in order to use it as needed (page 269). This would remove the intermittency of wind power generation because the release of compressed air would be controlled. A second idea is to use wind energy to create hydrogen for hydrogen-powered vehicles (page 269). This would, in fact, reduce our use of foreign oil imports. It would also reduce carbon dioxide and other pollutant emissions from cars. However, the technology for both of these ideas is not available and won't be for the foreseeable future. Therefore, a major policy that could be enacted might be to promote research into novel ideas surrounding wind. These ideas would have to support the ideals of renewable energy: reducing carbon dioxide emissions and providing a secure energy future while protecting the environment, people's health, and their rights. Local policies would have to be in place to make sure these turbines would be placed far enough from people so that their negative impacts are not felt (putting them in the middle of a giant cornfield in Iowa would be more appropriate than in a rural town in New York). It would be best if there was a size limit on new turbines to keep them from reaching the industrial scale that they are today.++

I would consider small-scale (residential) turbines to have the most relevance in the energy debate. Originally, the American Wind Energy Association placed much more emphasis on small-scale turbines than it does today (Wolff 1980). Industrial wind farms have been heavily subsidized through government policies, causing them to become popular in Corporate America and around the world. However, there has been a recent move towards supporting residential-scale wind systems through a new federal tax incentive (AWEA 2007b). If residential wind power becomes more popular, then net-metering will become a problem. Therefore, net-metering should be phased out of the policies surrounding wind development. The incentive for purchasing a wind system would come from the fact that you pay for your energy through the purchase of a wind system. In order to supplement the intermittent nature of wind, batteries and/or solar panels would also have to be purchased. Any of these purchases could be supported by a federal or state low-interest loan because of the high initial investment.

Better turbine technology is essential because it will allow more energy to be captured by turbines. Research into improving the technology would be increased by forcing competition between companies or by providing research grants to interested parties. A combination of both would be best ,because without competing companies there won’t be enough interest in creating more efficient and environmentally friendly turbines. Policies like this are already in place in many states, but they are supported through tax incentives and Renewable Portfolio Standards. This is a problem because it results in multinational and multimillion dollar companies investing in wind for the tax benefits only and not to help the environment (Hewson 2007). The results of providing subsidies and tax incentives for building industrial wind farms is expressed by Menz (2005): “To the extent that environmental damages and other external costs are not borne by resource owners, the price of the resource will be too low and the rate of use too high.” For this reason, it seems appropriate to have less corporate incentives for building large-scale wind projects and more incentives for citizens to purchase small-scale wind generating facilities to lessen their ecological footprint.

The original PURPA law in 1978 had a stipulation that wind facilities may not be owned by an existing utility by more than 50%. Modifying this so that at least 50% of a wind facility has to be owned by affected residents would allow those residents more of a say in siting and policy procedures at the local level. This would make more projects more acceptable to the communities where they are located and improve mitigation measures.

Other incentives come up for review every few years (such as the production tax credit) and risk expiration. For this reason, developers rush environmental impact statements and projects through the policy process in order to reap the benefit of the credit (Motavalli 2005a). This can result in poorly sited projects that have more negative impacts on the environment than they might otherwise. Incentives like this, if kept in place, should have a grace period before they come up for review, and environmental impact statements should only be prepared by an objective source, and not by the companies themselves.

Wind Power could be a promising source of energy for the needs of a growing population. But the industry has to be held to very high standards and must be forced to keep the promises that it communicates through public relations campaigns. This can be done through precise and effective policies providing incentives for practices that meet the industry’s broad goals. Overall, there should be a combination of industrial and residential wind sources. Industrial sources should only be located in environmentally benign areas and far from people. These should only be advocated if complementary technologies like air compression and hydrogen fuel are successfully developed as well. Residential sources of wind energy should be the major focus of policies because they truly begin the process of providing a secure energy source and reducing our greenhouse gas emissions. The barriers to these changes from current policy include public perception of wind energy and corporate lobbying forces. A public education campaign would be the best option for shifting public perception about wind energy, and this campaign would be best undertaken by a coalition of opposition groups to industrial wind energy and other environmental groups because these groups have all the information necessary in a centralized location. Removing the incentives for corporations will require politicians that are able to package the new policies in a way that is friendly and non-threatening to corporations. These changes will take time, but they are necessary for a secure energy future and for our environmental health.


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1 Capacity is the total installed production capability of a power plant. Because of the variability of wind, wind turbines are typically not capable of producing more than 35% of their capacity over time and therefore the capacity is far larger than actual output (Pimentel et al. 2002 and Golob and Brus 1993).



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