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They're both a market phenomenon and a government creation. They've been around for centuries as a means of producing power.

Their utility is probably best served in isolated rural areas, where bringing electricity from afar is very expensive. But the "wind farm" idea strikes me as a government creation. Even with today's oil prices, these things are still not profitable without subsidy.

Wind power is a rent seeking activity engaged in by crony capitalists and government. When it is mandated as is the case in the Northeast's RGGI scheme it is legal plunder. Wind power is more expensive than coal or natural gas generated electric power and is unreliable due to the intermittent nature of the wind. As Bastiat said: "Sometimes the law defends plunder and participates in it. Thus the beneficiaries are spared the shame and danger that their acts would otherwise involve... But how is legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them and gives it to the other persons to whom it doesn't belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime. Then abolish that law without delay... No legal plunder; this is the principle of justice, peace, order, stability, harmony and logic."
Stop the BRSA's Union Beach NJ 400 foot Industrial wind turbine that is planned to be sited within 1100 feet of residential homes. It would unjustly put the health, life and property of local residents in harms way. The recovery act money is being used to help finance this short sighted fiasco.

It's also an indication that Austria is not being run by the principles of the Austrian School of Economic Thought.

The cover of your textbook was a very poor choice.

Yes, considering that those kinds of wind turbines exist almost exclusively due to government subsidies, their being on the cover is quite ironic.

I thought technology was an exogenous variable for you guys? ;)

I'd be interested to know what the Coordination Problem pick for best energy generation technology would be though. How would you assess an ideal technology? ie. how would you measure its externalities or efficiency etc.?

What Bob said.

And I remember that ride well and I was thinking the whole way that this is a massive subsidy to that rural area.

Industrial wind turbines claim to provide clean renewable energy, but this is far from the truth. After many years of wind turbines in use, not one coal or gas plant the world over has been decommissioned because of IWTs - and eliminating our dependence on fossil fuels with a reduction in CO2 is their raison d’etre. They only generate from about 12 – 37 mph, changing speed constantly, and they consume electricity from the grid for their own needed power. To quote an expert: “Because wind blows intermittently, electric utilities must either keep their conventional power plants running all the time to make sure the lights don’t go dark, or continually ramp up and down the output from conventional coal-or gas-fired generators (called “cycling”). But coal-fired and gas-fired generators are designed to run continuously, and if they don’t, fuel consumption and emissions generally increase.” This is happening in places like Colorado and Texas where CO2 and power plant pollution have increased since they installed wind farms:
http://www.denverpost.com/headlines/ci_15081808
Plus, property values close to IWTs take a big hit due to genuine noise and health concerns. For this reason, Denmark requires power companies to compensate owners close to wind turbines for loss-of-value:
http://www.ens.dk/en-us/supply/renewable-energy/windpower/onshore-wind-power/loss-of-value-to-real-property/sider/forside.aspx
No wind developer or an elected official/proponent will ever suggested that home values should be guaranteed. Homes close to wind turbine installations lose tens of thousands of dollars in equity, and the closest ones can become unsaleable. IWTs should not be sited close to residential areas - PERIOD. And homeowners should not be asked to be good “green patriots” and “take one for the team” for a technology that does not live up to its claims! In fact, IWT’s are a gift to the coal and gas industries. They were first developed and marketed by Enron as a tool to help manipulate natural gas prices, and Enron wind was sold off to GE. Here are some great article on how inefficient they are at providing power:
http://www.energytribune.com/articles.cfm/6310/Britains-Wind-Farms-are-No-Spin-Zones-When-Cold-Hits
http://blogs.forbes.com/larrybell/2011/03/08/wind-energys-overblown-prospects/
http://opinion.financialpost.com/2011/03/05/lawrence-solomon-don%E2%80%99t-count-on-constant-electricity-under-renewable-energy-says-uk-electricity-ceo/
FYI, I run the website, www.noturbin.com in the fight to keep a 40-story wind turbine from being built in Union Beach, NJ 1,080 feet from the start of a densley populated neighborhood.

The American Wind Energy Association, the main developer funded lobbying group for the wind industry, would have you believe the industrial wind turbines are benign. They are not. Here’s a good example of wind turbine noise and shadow flicker as the blades pass through the sunlight:
http://www.youtube.com/watch?v=iyOImGHyJtQ
And living with the particular kind of noise that these industrial machines put out can cause a number of health problems for people living up to 1.5 miles away and more. Don’t forget, these machines are 400-feet+ tall and the blade span larger than a Boeing 747. When wind developers claim they are quiet, they are out and out lying. Dr. Nina Pierpont, a pediatrician and a PhD educated at Yale, Princeton and Johns Hopkins has coined the term Wind Turbine Syndrome to define the multitude of symptoms people living close to wind turbines the world over are experiencing. Her book of the same name is peer reviewed, and many physicians and scientists have added to her research over the past few years. The AWEA and other proponents have vilified her and try to discredit her, but the pendulum is swinging her way:
http://www.savewesternny.org/docs/pierpont_testimony.html
http://www.windturbinesyndrome.com/news/2010/blood-pressures-elevating-dangerously-after-nighttime-wind-turbine-exposure-australia/
http://windconcernsontario.files.wordpress.com/2010/07/wind-turbine-noise1.pdf
And worst of all, “We the Taxpayer” are funding the full cost of these monstrosities when taking construction grants, green grants, saleable greed credits, and special double declining 5-year depreciation, etc. into account. Plus, rate payers are expected to welcome the higher rates we will all pay because power companies are mandated to buy wind turbine power at many times the rate of conventional power. And as they generate power at the whim of the wind, it is often not needed at those times. On the hottest days of summer at peak demand there is often no wind.

They have wind turbines all over the German state of Schleswig-Holstein too. My friends from the area tell me that the government pays farmers to have them. It is part of this plan designed by the Greens to decommission the nuclear power plant that supplies energy to the state. Not surprisingly, the farmers are among the few who like having wind turbines up there. Everyone else hates them because their energy bills are higher.

In Union Beach, NJ, the Bayshore Regional Sewerage Authority is the entitiy attempting to install a 38-story turbine. I first became aware of this in November, 2009 when our town council held an open meeting to get feedback from the residents. More than 100 people showed up, usaually there's two or three, and there was a lot of anger in the room. The only people there who were for the turbine were two BRSA commissioners, one unemployed construction worker who saw the turbine as a job opportunity, the granddaughter of the BRSA's head commissioner, and a guy from a local branch of the Sierra Club who seems to know the BRSA people. I went home and started building the www.noturbine.com website that night.
We are fortunate here that our town council unanimously opposes the turbine. In many communities it's the local government pushing for them, lured by monies offered by developers, the urging of farmers who are offered the chance to lease their land and kickbacks from power companies. As time went on our neighboring towns of Keyport, Hazlet and Holmdel, and our county Freeholders passed resolutions opposing the turbine. Keyport and Hazlet have homes that fall within a 1.5 mile radius of the turbine, so they are trying to protect their home values and the health of their residents too. Only one of our state reps, Councilwoman Handlin, has been very supportive. Our other assemblyman is sympathetic, and our state senator has his head in the sand. Our US Congressman Pallone gave us an audience after a lot of time had passed, but he's too concerned about losing the green vote, even though 4 of the 13 towns in his district and the county passed resolutions. It's time for a new congressman.
I could go on, but the one thing I'd like to impart is that the fix is in NJ, as it is most other places. The state DEP has granted the BRSA numerous exemptions and looked the other way regarding a host of issues. The state passed several laws giving wind turbines special treatment. One clause gave the BRSA carte blanche by stating that any entity already issued a CAFRA permit would not be bound by any state regulations - and the BRSA at the time was the only such entity. The BRSA has been evasive from the start about their intentions. And even if they were transparent, all the meetings in the world with a mass of residents voicing their opposition would not change their plans. We have a good lawyer, we're battling in court, and the outcome is uncertain. And in the US, an independent sewerage authority should be accountable to the people they serve, but they are arrogantly pursuing their turbine against the will of the vast majority of the people.

I'm doing work on the economic viability of offshore wind farms right now. They exist through government subsidies and wouldn't have much traction if states weren't passing laws requiring X% of their power to come from renewable energy.

Offshore wind has many technical problems. In most areas, the peak times for wind production are the opposite of when we need more power. It makes them rather pointless.

I don't know enough about traditional wind farms to have an opinion on them.

Wind is unreliable so it cannot supply base load power.

If part of the electricity generation capacity involves storage, using wind saves on depleting lakes used for hydro-electric power generation.

Jevons dismissed wind power in 1865:

1) windpower is not new
2) windpower is intermittent and unsuitable for modern work
3) windpower is land constrained
4) windpower for transportation did not work

HT: http://www.masterresource.org/2009/01/w-s-jevons-1865-on-windpower-memo-to-obama-part-i/

Has anything changed since 1865?

>> 3) windpower is land constrained

I flew to Oslo from London last year and saw what appeared to be hundreds of wind turbines floating in the North Sea. My g/f thought I was nuts but they're definitely there: http://en.wikipedia.org/wiki/Horns_Rev (I'm not 100% sure this is the one I saw - there are a few different farms in that area apparently). This one is owned by a Danish state power company called 'DONG'. *chortle*
So, still not market-based.

Anyone reading the comments should understand that the claim in the comments above "They [industrial wind turbines] were first developed and marketed by Enron as a tool to help manipulate natural gas prices" is so completely off-based and laughable that you probably don't want to repeat it to intelligent people.

Wind turbines have been around since before Enron was a gleam in Ken Lay's eyes, but even if wind power was an Enron invention I can't imagine how they could be used to manipulate natural gas prices.

It is true that "Enron wind was sold off to GE."

Wind turbines exist partly because of subsidies and partly because the law requires utilitites to buy the power generated from them whether the utility needs it or not and the utility has to pay market rates.

The only wind technology that I have seen work is the home version where the electricity generated is stored in batteries and the house runs off the batteries.

I was reading about wind power some days ago on Wikipedia and got some first hand information from a contact of mine.

Wikipedia data show that costs look higher than standard production, but not terribly higher. It is surely a much more meaningful way to produce energy than photovoltaic rubbish.

In Germany they have problems with variability of wind power which creates overloads on the electrical network, but these problems may be easily solved as long as wind power is a small percentage of overall power (in Germany is 8%, and I think it could be easy to manage these problems, but probably it would be far more difficult to solve them if wind power were 30% of the total). Unfortunately, costs are not reliable because they include subsidies, so that real production costs may not be computable.

In principle there is enough wind to produce all the electricity that is needed, but in practice it is not true. However, to achieve some 20% production - if it were economically profitable - wouldn't be bad. Unfortunately, electricity is just a fraction of total demand for energy (gas heating, fuel...)...

Wind power is overrated, but let's not underrate it: it's not as foolish as photovoltaic.

Regarding Enron, they established the modern wind industry in the sense of its network of subsidies and regulatory favor: production tax credit, "green tags" or renewable energy certificates or credits (by which the energy is sold twice), and laws requiring a certain percentage of utilities' energy to be produced by wind (as the largest nonhydro renewable available).

This supposed "Green Energy" is responsible for thousands of tons of slightly radioactive toxic waste for each and every IWT. One only needs to look into how the Neodymimum for the one plus tons of magnets in each one is produced. As a matter of fact if you go to google maps and take a sattelite view of Baotou China you will see a lake of sludge that covers more than 4 square miles and is over 100 feet deep. It is true that computer hard drives and many other high tech uses for rare earth minerals contribute, but the lions share is wind turbines.

In order to produce 1 ton of rare earth around 2000 tons of radioactive toxic waste are produced. In 1 ton of rare earth the highest concentration of Neodymium, (used to make the magnets) is about 18%. For ease of calculation lets call it 20%. Thats 400 lbs per ton of rare earth.

The concentration of Neodymium in a one ton high grade magnet is about 35% or 700 lbs.
Look up the sourcing on the figures they are all readily available on the web.
What it all adds up to is around 4000 tons of radioactive toxic waste to make the magnets for ONE TURBINE. Keep in mind larger turbines above 1 MW use still larger magnets, which means more waste.

This is how "Green Energy" by wind power is born. How much energy and CO2 will it take to counter this? I don't know, but we need to recognize the environmental deficit that wind turbines impose but ignore as though they bear no connection to the residues neccessary for their manufacture.

If memory serves, the Czech Republic had to ban the import of German wind-driven power in order to protect its electrical grid from damage.

Regards, Don

In Spain, Gabriel Calzada (Juan de Mariana) did a great research regarding the "bubble" of the green ennery-employment (BTW solar energy is more a bubble than wind energy): www.juandemariana.org/pdf/090327-employment-public-aid-renewable.pdf.
The research was awarded by Templeton.

In Germany they have problems with variability of wind power which creates overloads on the electrical network, but these problems may be easily solved as long as wind power is a small percentage of overall power (in Germany is 8%, and I think it could be easy to manage these problems, but probably it would be far more difficult to solve them if wind power were 30% of the total).

Remember that 8% is the average, it can be much more at peak times. And since German utilities are required by law to purchase renewable energy (at wildly above-market rates) from whoever wants to connect to their grid, even at 100% the wind turbine operators will keep them going.

Electricity prices at the EEX energy exchange in Leipzig have fallen below zero at times. German utilities are literally begging their neighbors to take the overload of energy that they can't handle.

Unless the law changes to discourage further expansion of unreliable renewables, the German grid will suffer a critical breakdown sooner or later.

Prayer wheels to Gaia funded by human sacrifices.

The windmill industry varies greatly from country to country. The classic article on windmills is "Bricolage or Breakthrough" by Garud and Karnøe (Research Policy, February 2003). They contrast the successful emergence of the modern Danish windmill industry, through "bricolage" (meaning user-driven, incremental, entrepreneurial, bottom-up innovation) with the largely unsuccessful attempt to create a viable US industry through "breakthrough" innovation (top-down, science based, centrally planned, discontinuous). The Danish industry pioneers were mostly small farmers who wanted cheaper energy, hippies who wanted independence from the grid, and other tinkerers, and the technology was borrowed from the aerospace industry. In the US there were government-directed efforts to create a high-tech industry, starting largely from scratch, based on the wisdom of experts, not the wisdom of crowds. This would actually make a nice little sidebar for EWOT on spontaneous order versus central planning.

That is what I was thinking Peter!

The story in Czech rep. is slightly different; there is a very weak link between north and south of germany. When the wind is blowing, the italians start running their water powerplants in reverse and all the energy starts flowing through czech republic. The czech operator resolves this usually by turning off the power plants in north and turning on the power plants in south. But the cross-border power lines are not quite prepared for this so this is begging for a problem.
The germans are only lucky that there are lots of hydro-power plants in norway that can be used to pump the water up to the reservoirs...

I love Wind Turbines in Australia. I want to go to Australia.

Thank for post.

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