Investing in Wind Power Is Smart — But Not How We’re Doing It

You’re probably a fan of wind power. It provides a limitless supply of clean energy. The turbines are manufactured primarily in the rust belt, creating much-ballyhooed green jobs for unemployed factory workers. Wind farms generate profits for local utilities, alternative energy companies, farmers, and ranchers, not to mention manufacturers like General Electric. What’s not to like? Well, there’s this: The US is building generating capacity in places that don’t need the electricity. Most wind farms are located in rural areas, where there’s plenty of land and a pragmatic attitude that welcomes wind turbines as a new “cash crop.” Indeed, Texas and Iowa recently surpassed California as the top wind energy states. But the transmission infrastructure to carry that power to cities is missing. Wind farms rely on big tax breaks to be competitive, and right now that money is being wasted. When more people catch wind of that fact, this promising form of alt energy could be labeled a boondoggle for farm states, as corn ethanol has been. For evidence of how ass-backward things have become, consider the curious phenomenon of negative electricity prices. These are just what they sound like: Because of the peculiarities of the energy market, producers of electricity sometimes pay grid operators to take the power they make. In sparsely populated west Texas, where the wind business is booming, the wholesale price of electricity was negative for about 1,100 hours—more than a month—in 2008 and more than 700 hours in 2009. How could this happen?...more