Guest Post: Minnesota Doesn’t Own North Dakota

This guest post was submitted by Isaac Orr, policy fellow for the Center of the American Experiment

It’s interesting that in his recent guest post, Peder Mewis spoke of the contribution that wind energy makes to “our state.” The reason this word choice is interesting is because he doesn’t live in North Dakota. I’m not sure if he believes Minnesota owns North Dakota, making it “our state,” but North Dakotans would be wise to ignore the voices that have cheered on an industry that has caused Minnesota’s electricity prices to skyrocket.

In the spirit of full disclosure, I live in Minnesota, but our state should be an example of what not to do. Minnesota used to have electricity prices that were 20 percent below the national average. However, in 2007, then-governor Tim Pawlenty, a Republican, signed a law mandating that 25 percent of the state’s electricity come from renewable sources from 2025.
Now, Minnesotan’s pay record high electricity bills, as you can see in the graph below that was created using data from the U.S. Energy Information Administration.

The main reasons electricity prices in Minnesota continue to skyrocket is that wind is more expensive than our existing coal, natural gas, and nuclear plants, without federal subsidies as you can see in the graph below.

There are also a lot of hidden costs that come along with wind in the form of spending billions of dollars on transmission lines and needing to have extra power plants on the grid because wind power is unreliable. Once all of these hidden costs are accounted for, wind is about three times more expensive than Minnesota’s existing power plants, according to Center of the American Experiment’s (where I work) conservative calculations.

The difference in cost is even bigger in North Dakota because the coal plants located in the state are some of the lowest-cost sources of electricity in the entire country. According to SP Global, the Coal Creek plant generates electricity for about $21 per megawatt hour. Assuming similar economics for the other ND coal plants means wind is at least four times more expensive than the electricity sources you’ve already got.

Transmission

Despite the author’s claim that wind projects “provide” transmission upgrades, wind projects do no such thing. Transmission lines cost between $1 million and $2 million per mile, and these costs are not paid by wind companies, they are paid by electricity customers in the form of higher prices.

In fact, wind developers have called it quits on thousands of megawatts of renewable projects in the last several months exactly because they would have to pay their own way for their own transmission costs. According to E&E News, of 5,000 megawatts of wind and solar that were originally seeking to be connected to the grid, all but 250 dropped out because it would cost more than $100 million to hook these projects up to the grid.

In terms of transmission costs, renewable energy sources are not providing a free lunch, they’re eating yours.

Wind Power is Not Reliable: The notion that wind power is reliable is laughable. Even during the best months in North Dakota, wind turbines only produce about 50 percent of their potential. This percentage is often called a “capacity factor” in energy lingo.

By July, the wind is only 28 percent productive. Pretending that the wind is a reliable source of energy is like pretending the Fargo Dome has a sold-out crowd when only 28 percent of the seats are filled.

The problems associated with the low productivity of wind turbines is compounded in multiple ways. Wind turbines only generate electricity when the wind is blowing, and no one really knows when exactly that will occur.

Most people don’t realize that the grid is not a storage device for electricity, and that electricity must be generated at the instant it is consumed. Think of what happens when you unplug a lamp, the light goes of virtually instantaneously. This means a power plant must be ready to generate electricity the second you need it, just in case the wind decides not to show up to work that day.

One day that the wind decided not to show up to work was during the Polar Vortex of 2019. Not only were wind speeds too low to generate electricity over vast swaths of North Dakota, but it was actually too cold for the wind turbines to operate.

Indeed, at -22 degrees F wind turbines are shut down to prevent them from breaking, and at these temperatures, electric heaters are used to keep the oil in the turbine gearboxes from freezing. This means instead of generating electricity when the grid needed it most, wind turbines were consuming it.

North Dakota relies upon its coal plants when the wind doesn’t show up to work. These plants are incredibly productive, with most of them producing far more frequently than North Dakota’s wind fleet, as you can see from the table below that originally appeared in S&P Global.

The bonus to having a coal-fired power plant is that they are not dependent on the weather, humans control when, and how much electricity is generated from these plants. If North Dakotans need more electricity, they simply need to burn more coal, not hope the wind blows.

Tax Revenue

Let’s talk tax revenue turkey. The coal plants mentioned above generate $130 million in state and local taxes, according to North Dakota State University, which is about 14 times more than the wind industry.

One can certainly be forgiven for thinking “The More the Merrier” when it comes to tax revenue, but North Dakotans need to know that federal subsidies for wind allow it to undercut the market for coal, making it more difficult for coal to compete in the regional electricity markets. By building more subsidy-dependent wind in the Bison State, you could potentially kill the goose that lays the golden eggs.

The graph below shows the amount of tax revenue generated by coal in North Dakota is more than five times greater than the revenue produced by wind. For reference, a megawatt hour is a volumetric measurement of electricity, similar to a barrel of oil.

As a result, building more subsidized wind projects jeopardizes North Dakota’s coal plants, which are much better at generating tax revenue than wind projects. If North Dakotans must choose one, they should have all of the relevant information at their disposal to make the best decision possible.

Conclusion

A lot of people from the Twin Cities feel like they can tell people in rural Minnesota and North Dakota what they should do. As someone who grew up on a small dairy farm in Wisconsin, the smugness is unbearable. Ultimately North Dakotans should make up their own minds about the costs and benefits of different energy sources. Just don’t let our renewable energy industry blow too much smoke up *you know where.*