Those opposed to alternative energy sources like wind often point to the perceived high cost of wind power as a hurdle to implementation. Rather, the logic goes, we should stick to dirty but inexpensive coal and other traditional sources.
Cheap coal energy is a myth. Sure, it’s an easy-to-believe myth, when you keep to low prices for pure coal on the market, but that ignores the costs that taxpayers pay in health and air quality cleanup.
According to a European Union report on energy costs, when you actually incorporate all of those hidden costs, coal falls way down the ladder. What then, is the cost-cutting king of energy sources? The answer is wind power.
This represents a huge shift in how energy sources are represented in policy discussions, where renewables are often cited as being too expensive to the taxpayer to be viable.
The European Market Example of the Cost of Wind Power
The EU report on energy found its energy costs by including things like costs to the taxpayer in healthcare (for problems caused by polluted air, like asthma or lung disease), pollution, and mining. That is, the costs that oil and gas companies don’t pay, but taxpayers do.
So once all of those external costs were accounted for, the report states that for each megawatt hour (MW/h) of electricity generated, the onshore cost of wind power is roughly C$148 per MW/h, compared to gas and coal which can cost up to around $231 and $329 per MW/h, respectively. Nuclear and solar fall somewhere in the middle of these price points.
The Alberta Market Example of the Cost of Wind Power
In Alberta, the energy market buys power from a variety of sources, and sets a market price every hour. When wind blows, the market buys wind power on the cheap, which in turn brings down the price for other types of energy as well.
At the end of the day, wind producers get paid the lowest price for their energy in the Alberta market, and pass those savings on to Albertans.
The only problem is that the very affordability and low cost of wind power on the market doesn’t have producers jumping at the chance to cash in on wind farms. So it is not wind’s high cost, but its affordability that is keeping it out of the market.
The US Market Example of the Cost of Coal and Fossil Fuels
Three years ago, a researcher from Harvard University, Paul Epstein, published work that found that every year, coal alone caused $345-500 billion of damage to the US economy.
At the end of 2012, researchers at the Environmental Protection Agency found that hidden health costs related to using fossil fuels added up to $886.5 billion a year. If those costs were added to fossil fuels, their prices would go up anywhere from $0.14 to $0.35 per KW/h.
The researchers also said that $886.5 billion was likely to be an underestimate, since they only focused on a few external costs, and left out things like transportation of fossil fuels and climate change, greenhouse gases released from combustion, or pollutants in the water.
Once again, clean wind energy emerges as a clear cost-cutting option, cutting billions of dollars in costs to citizens’ health.