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May 23, 2016

News Flash: Wind Power is Not Cheaper than Coal

May 23, 2016
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Wind advocates frequently argue that wind power has competitive prices. Recently, PolitiFact even granted a rating of “True”—its highest rating—to President Obama’s claim that “in Texas, wind power is already cheaper than dirty fossil fuels.” Let’s ignore for a moment that the word “dirty” could be ascribed to nearly any industrial process, including the process used to mine materials for and manufacture wind turbines. On the question of wind power being cheaper than coal, Obama’s statement could easily have received a rating of “mostly false” under Politifact’s rating system because, as Politifact defines that rating, “[t]he statement contains some element of truth but ignores critical facts that would give a different impression.”

Obama’s statement and Politifact’s ruling both ignore three critical facts that would give a different impression:

1.) the cost of unreliable (intermittent) sources of electricity like wind cannot be compared directly against the cost of reliable sources like coal (also called “dispatchable” sources by industry insiders),

2.) intermittent wind power actually imposes costs on dispatchable sources by robbing them of production without replacing their generating capacity (which is critically important to grid reliability), and

3.) the evidence shows that the all-in cost of wind power, including the costs imposed on reliable power plants—as opposed to subsidized prices wind producers receive—is significantly higher than the cost of electricity from existing nuclear, hydroelectric, coal, and natural gas plants.

In short, the idea that wind power is cheaper than coal power falls somewhere between a meaningless statement and a myth.

Intermittent Resources Like Wind Are a Separate, Lower Class of Electricity Generation

Wind turbines only generate electricity when the wind is blowing, and it is a fact of life that the wind is an inherently unreliable source of energy. Wind power’s intermittency is a well-known limitation and a significant drawback, especially because the large-scale battery storage required to make wind a reliable resource isn’t commercially viable.

Nevertheless, wind advocates breeze through the fundamental problems of intermittent, unreliable energy and attempt to sell the idea of a wind-fueled future on the fiction that wind power can compete head-to-head with reliable sources of power like coal, nuclear power, or natural gas. In fact, the Politifact piece specifically mentions the argument that “wind-generated electricity can’t (or shouldn’t) be price-compared to electricity generated by fossil fuels or nuclear sources.” However, it appears that critical point did not sway Politifact, given the “true” rating it assigned Obama’s comment. We should note that the argument was put forth by the co-author of a groundbreaking IER study on the cost of electricity, Tom Stacy, who was involved in a lengthy email conversation with the Politifact author attempting to convince him such a comparison (of wind to coal) is bogus.

IER is not alone on this point. The Energy Information Administration (EIA)—a fair referee in this arena—has issued the same warning for years. EIA actually separates dispatchable and non-dispatchable resources in its LCOE calculations and warns that “caution should be used when comparing them to one another.” In essence, dispatchable plants “whose output can be varied to follow demand” (e.g., coal, natural gas, nuclear, etc.) are more valuable than wind turbines “whose operation is tied to the availability of an intermittent resource.”[1]

Because wind cannot dispatch power in response to demand, the electricity it produces is less valuable, and its cost should not be compared directly against dispatchable resources like coal, nuclear power, or natural gas without serious caveats or significant adjustments to factor in the cost of battery storage.

Wind Power Imposes Costs on Reliable Power Plants

Last year, IER released a report on the levelized cost of electricity (LCOE) from existing generation resources, a first-ever look at the LCOE of the existing sources on the grid as opposed to new resources. Crucially, the report also introduced the concept of the “imposed costs” created by intermittent resources. The report went one step further and estimated those costs under modeled scenarios to find that one megawatt-hour of wind production imposes a cost of $29 on dispatchable generation from natural gas plants.

The concept of imposed costs is not intuitive, so here’s an example. Suppose a power grid consists of only combined cycle natural gas plants that are allowed to operate freely and satisfy the second-by-second electricity demand on the system. Then, even though the system has enough dispatchable capacity from the natural gas fleet to meet demand, we decide to introduce new, intermittent power from wind turbines.

The natural gas fleet is still needed for those frequent times when wind output is low or zero,[2] but it has to back down to accommodate the intermittent wind generation. In other words, its production is crowded out by the intermittent wind generation. Lower production from the same capital-intense facility is the source of “imposed costs”—wind generation significantly raises the LCOE of the dispatchable resources on the system. By decreasing a reliable power plant’s run time without also reducing its fixed costs, wind power makes it more expensive to generate electricity from existing and new dispatchable resources. [3]

The phenomenon is shown graphically below. New wind production causes the natural gas fleet’s capacity factor to drop from 87 percent to below 60 percent. The imposed cost of wind power in this scenario is nearly $30/MWh, a cost that should be attributed to wind.

LCOE Chart 2


Analysis of the Full Levelized Cost of Electricity Shows Wind is Not Cheap

The summary table of our LCOE report shows that, when the imposed costs of intermittent resources are taken into account, the LCOE of wind is not competitive with other new sources—especially combined cycle natural gas—and is nowhere near competitive with existing coal, nuclear, hydro, and natural gas resources.



By accounting for imposed costs and adding them to the LCOE for wind power, IER’s report allows for more accurate comparisons between dispatchable and non-dispatchable sources.[4] Under a true apples-to-apples comparison, new wind resources are nearly three times more expensive than existing coal resources.

The article also overemphasizes the importance of wholesale prices for wind power. Wholesale prices don’t take into account the lifetime costs of building and operating a generation resource, nor do they factor in the multiple subsidies that wind producers receive (e.g., federal wind PTC, accelerated depreciation rules, federal loan guarantees, Renewable Energy Certificates, state and local utility property tax rebates).


PolitiFact’s assessment of wind power’s affordability ignores critical facts that would give readers a different impression. By its own standards, we rate Politifact’s conclusion regarding Obama’s statement “mostly false.”

[1] U.S. Energy Information Administration, Levelized Cost and Levelized Avoided Cost of New Generation Resources in the Annual Energy Outlook 2015, June 2015, pp. 1–2,

[2] Potomac Economics, 2012 State of the Market Report for the MISO Electricity Markets, June 2013, (See the discussion on the capacity value of wind, pp. 15-16),

[3] The report calculates and includes the cost imposed on conventional combined cycle natural gas power plants. See, Thomas F. Stacy and George S. Taylor, The Levelized Cost of Electricity from Existing Generation Resources, Institute for Energy Research, pp. 1, 9, June 2015,

[4] Stacy and Taylor, The Levelized Cost of Electricity from Existing Generation Resources, p. 11.

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  • rally2xs

    Every corner of energy usage needs the magic battery. The magic battery is cheap and high capacity and cheap and lightweight for automotive use and cheap and durable and cheap and quickly rechargeable and cheap. When we get that, we’ll have the ability to store wind and solar power and use it when we need it. Lacking that, we can build out the power grid so’s we can ship the power from where wind is blowing and the sun is shining to places where it isn’t. This would be the “global power grids.” Fossil fuel’s days are numbered – we’re either going to run out, or we’re going to get cheaper power from advancements in zero-fuel-cost sources – wind, solar, geo, tidal, etc. Meanwhile, we should build all the wind and solar that we possibly can, and prepare for either the global power grid or the magic battery.

    • TruthinMaine

      You live in the ideological fantasy world. Don’t impose costly ineffective wind power on a grad that neither needs it nor wants it. Your idea of the grid expansion is absurd and costly. You don’t take into consideration the huge losses over distance for this fantasy. Electricity should be produced where the demand is highest. Power Boston with cheap natural gas from right there in the northeast and add the second reactor that was originally planned for Seabrook rather than destroy the natural and scenic resources of remote Maine with ugly out of scale and out of place wind turbines that produce a fickle trickle of power.

      • Smitt

        Our electrical grid, like our roads and bridges are in desperate need of an upgrade anyway. Why not put people back to work upgrading for the future of energy, which is without a doubt renewable.

        • Kevin Kb O’Brien

          do some research on australia’s upgraded grid and the cost they are forced to endure.

    • BruceWilliams

      I assume your day job is writing comedy? Because you’re good at it.

  • J.P. Katigbak

    The issue still remains to be seen on why using wind power is justified as long as subsidies are to be continued despite huge costs. The so-called “magic battery”?! It would more like a rectangular crystal ball supposedly made for electricity generation.

    Also, in my view, the ideological and philosophical aspects of environmentalism are plagued with junk science-oriented controversies and motivations for socialism and left-liberalism. So beware as always. – J.P.K.

  • Richard Wade Brooks

    If high demand low frequency usages can be scheduled when the wind is blowing wind does become cheaper. I.e. If you are looking for savings from wind, wait until the wind is blowing to start up your keln. But if you are going to work on a 9-5 then wind has problems, in most locations.

  • Ray

    MAGIC BATTERY: Dig a well as deep as possible, line it so it doesn’t fill with water, then put an insanely heavy thing in it like a massive boulder attached to cables strong enough to lift it, then employ some gears to do the lifting, and finally attach the fast end of the gear chain to a generator. — When power is generated by the unreliable source… wind, solar, hydro, whatever… it runs the generator in reverse as a motor, which turns the gears, which lifts the heavy boulder at the bottom of the deep well creating stored potential energy. Then… when power is needed, beyond what is supplied by the unreliable source, the potential energy stored in the lifted boulder is used to run the generator to produce the needed power. — That’s the 5 y/o level explanation. :-p

  • Ray

    I will call my MAGIC BATTERY Ray’s Magic Gravity Battery. 😀

  • William Collins

    The reality is everywhere this grand wind scheme, among other dreams of the environmentalists, is put into practice the cost of electric increases while at the same time consumers are paying through taxes. In Europe the imposition of renewables has resulted in very high electric rates. While most American states electric rates fall below 10 cents per KWH western European rates are generally above 20 cents per KWH with 10 countries actually above 25 cents per KWH. Denmark and Germany actually pay much higher at around 39 cents per KWH.

  • Toren Hudson

    Once upon a time, there were railroads that needed to be built in order to facilitate communication and travel between the eastern states and the western states. But no one wanted to build these transcontinental railroads because they were not cost effective for solely profit-motivated railroad companies – they needed to build thousands of miles of track for a limited quantity of customers – a huge capital expense and risk. But the federal government stepped in to provide subsidies for it – miles of free land on either side of the tracks, which the railroad companies could sell as they saw fit. The Transcontinental Railroad was built, increasing national security accelerating a transportation revolution that, in turn, gave a massive boost to industrialization in America. That accelerated our production and productivity to the point that we were a world power by the turn of the century. Don’t tell me a new project of potentially great import should not be subsidized.

    To add to that, there are a lot of sins of omission in your obviously propagandistic article: One of them is that oil or coal are cheaper. That could only be true if THEY were not subsidized as well. Let me explain a few. First, there are terrible environmental consequences to coal – ones which seem to always be fixed with taxpayer dollars (yours and mine) rather than the big energy companies. Second, the oil industry is subsidized to the effect of billions of dollars by taxpayers in the form of a military that has to protect those lifelines all across the globe. Third, the price of oil is artificially kept low in the United States by further subsidies to the oil and coal industries. Fourth, coal companies get huge “incentives” from communities that desperately need the jobs that they create.

    Your article is propaganda and you know it. I am so tired of deception aimed at defrauding the taxpayers and consumers of America. It is exhausting to fight you because careful science is not as flashy or as cheap as the lies that spread across the web in memes.

    • Kevin Kb O’Brien

      Get your facts straight please, and cite your claims. Their efforts led to the Pacific Railroad Acts of 1862 and 1864, which provided several forms of assistance These provisions sound more generous than they were. The land grant ultimately proved valuable to both railroads but played only a minor role in financing their construction. The land was difficult to sell, in large part because it had first to be surveyed, and the overwhelmed government land office issued patents (titles) to parcels at a glacial pace. In the end the land grant helped underwrite Union Pacific construction mostly as collateral for yet another class of securities known as land-grant bonds. The government bonds have often been described as a subsidy or handout to the builders of both railroads, but they were in fact a loan that ultimately had to be repaid. Each company was, of course, responsible for paying interest on its own they in effect made contracts with themselves, taking care to build in generous profits for the construction companies at the expense of the railroad bonds Years later, when newspaper charges of scandal and bribery in the construction work blew up into a congressional investigation, Crédit Mobilier became a symbol for corruption and malfeasance . You have a good idea repeat corruption and screw the taxpayers, smart thinking
      Also, coal burning is very clean, b/c of scrubbers, water spray injection, and other filters, also, what are you talking about, how is coal subsidized or oil, please cite your false claims. Thank you for trying to make sense when you are a senseless tree hugger. I will not read any response because, I may not always be right however I am never wrong.

    • Kevin Kb O’Brien

      But look at the breakdown. The single largest expenditure is just over $1 billion for the Strategic Petroleum Reserve, which is designed to protect the U.S. from oil shortages. The second largest category is just under $1 billion in tax exemptions for farm fuel. The justification for that tax exemption is that fuel taxes pay for roads, and the farm equipment that benefits from the tax exemption is technically not supposed to be using the roads. The third largest category? $570 million for the Low-Income Home Energy Assistance Program. (This program is classified as a petroleum subsidy because it artificially reduces the price of fuel, which helps oil companies sell more of it). Those three programs account for $2.5 billion a year in “oil subsidies.”So let’s ask the question in a different way: “Should we allow oil companies to take a tax deduction also available to any U.S. manufacturer such as Apple or Microsoft? Section 199 of the IRS code. This is a tax credit designed to keep manufacturing in the U.S., but it isn’t specific to oil companies. It is a tax credit enjoyed by highly profitable companies like Microsoft and Apple, and even foreign companies that operate factories in the U.S. Further, the deduction for oil companies is already limited. Apple is able to take a 9% manufacturer’s tax deduction, but ExxonMobil is only allowed to take a 6% deduction.

    • Chewbacca2000

      Solaris…….that is all

  • youcancountonthomas

    I was looking for something for the house, about 3000 to 5000 watts.. In the winter, the wind blows hard and constant, cold down the narrow valley.and blasts through the house heated by oil and electric. Dirty Electric power into resistance heating and charge some batteries will be cheaper than what else on offer. So much for Google ads and your theory for home supplements, I still want one.

  • nedford

    Wind in Ohio has been underselling coal and natural gas since 2012. The base price of wind has dropped by about half since then. Your argument about natural gas backup requirements is nonsense – anyone who understands how the grid is operated knows that the U.S. and Ohio have much more natural gas capacity than coal, and many times as much as we have wind. The cost of wind and solar is now so low that fossil generation is never going to expand again. We need to completely eliminate coal and eliminate about half of current natural gas generation before we run into situations where wind requires any sort of balancing.

    The good news is that this is the best economic strategy for U.S. electric customers. No wonder the fossilheads are pulling out all the stops. A whole lot of people are making really dumb investments right now.

    Granted I’m writing a year after you posted this article, but it came up at the top of a google search because you paid to have it at the top of the search results.

  • Paul Heller

    Nice try on using the leveled cost of Electricity to pin the imposed cost on wind turbines. Anytime a utility subscriber backs off on their energy usage either by simply reducing their consumption or supplementing it, they impose a cost to the utility company. So it does not matter the reason why a subscriber intermittently uses the grid, it only matters that they are not consuming and being billed for energy. You have simply targeted one competing reason for said LCOE. So to deal with the law of supply and demand, you need to compete on cost/value. In general, alternative energy becomes “cost effective” only when you are in an area where utilities are not available. Sometimes the cost per utility pole to reach the customer is what makes alternative energy the only option. Have you considered competing for market share the way other industries do? If you do not want alternative energy taking market share from you then you need to consider hedging your bets like other industries do. Just like Coca Cola serves non profitable markets in remote parts of the world to simply prevent competitors like Pepsi from gaining a foothold in an area that might turn profitable in the future. So when you quote an expensive price per pole to reach a subscriber because you know you will never regain the investment by providing it for “free”, then you are giving alternative energy free market share and the high price quote for your competitors to use against you. Other industries try to predict future market share and opportunity cost. Have you placed a value on the cost of potential market share? I think you article is targeted to win followers to lobby legislation on our behalf. The article is weak at best. How about using LCOE to prove that investment in wind turbines do not come close to paying for themselves over their lifetime when cheaper sources are available. How about total cost of ownership? Interesting article but it misses its mark.

  • Chewbacca2000

    Salt reactors. Nuclear minus regulations and waste disposal is ridicously less expensive and ultra reliable, barring tsunami and earthquakes. Go after the salt reactor and put zero emissions into our air. Also, let’s gradually get off of fossils. Reminds me of Obama care and this tax plan. Hurry up and rush it through = higher burdens on the people. Use a all of the above approach and no more Solyndra situations please.

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