Wind Energy, Onshore Case—Wind Turbine Capital Costs and Tax Breaks12 Apr
In January 2009, Gov. Deval Patrick set a goal of developing 2,000 megawatts (MW) of wind power capacity, enough to power 800,000 Massachusetts homes, by 2020. This post addresses the unrealistic expectations of that goal in terms of onshore wind turbines. Please see the post of April 5 for other onshore wind energy issues. (The offshore case will be treated in future posts.)
Issue 3: High Capital Cost of Wind Turbines
The total capital cost of installing 1,028 MW of onshore wind in Massachusetts is approximately $2.5 billion based on $2,438 per MW. The following table, from the Institute for Energy Research, compares the capital costs of competing electricity generating technologies.
Overnight capital cost, new generating technologies ($2,010 per kilowatt)
- Conventional natural gas combined cycle—$978
- Conventional combustion turbine—$974
- Advanced combustion turbine—$665
- Onshore wind—$2,438
- Offshore wind —$5,975
Issue 4: Tax Breaks Needed to Sustain Wind
Onshore wind—and even more so for offshore wind—has capital costs much greater than the capital costs of conventional fossil fuel systems as indicated in the previous table. This cost compels state and federal governments to provide financial incentives that promote the deployment of renewable energy systems to help offset these large capital costs. According to the Database for State Incentives for Renewables & Efficiency, incentives in Massachusetts include
- excise tax deduction for solar or wind-powered systems
- excise tax exemption for solar or wind-powered systems
- commonwealth wind incentive program—commercial wind initiative grant
- commonwealth wind incentive program—commercial wind initiative loan