PoliGraph: Entenza wind power claim checks out

Posted at 12:30 PM on July 23, 2010 by Catharine Richert (4 Comments)
Filed under: Campaign 2010, Campaign 2010: Minnesota Governor, PoliGraph

Boosting Minnesota's green energy production will be good for Minnesota's environment and for its economy, says Matt Entenza, a DFL candidate for governor.

"Every wind turbine that we put up in Minnesota in our productive areas makes as much money as an oil well does in Texas," he told viewers of a June 1, 2010, virtual town hall.

In fact, when it comes to profitability, wind turbines and oil wells bring in a comparable amount of cash.

The Evidence

Dissecting Entenza's claim requires a bit of math.

Entenza's campaign makes the conservative estimate that each turbine operates at 25 percent capacity - or the average wind turbine produces about 3,285 megawatt hours annually. But experts in the Minnesota wind industry say that's a conservative estimate as most turbines in the state operate at between 30 and 40 percent capacity.

At about $79 for every megawatt hour of wind energy, that adds up to $260,500 annually.

How do oil wells compare?

Entenza isn't talking about the drilling behemoths off the coast of Texas. Rather, he's referring to small operations that produce less than 10 barrels a day - and make up 80 percent of the drilling in Texas.

Entenza's campaign predicts that, on average, these wells produce nine barrels a day and make $244,929 annually; according to the Energy Information Administration, these wells actually average about 7.3 barrels a year, driving down that sum to $198,665 annually.

So, Minnesota wind turbines make as much, if not more, than most oil wells in Texas.

The Verdict

No matter how you dice the numbers, wind turbines and oil wells are comparable when it comes to profitability.

Entenza's claim is accurate.

Sources

Matt Entenza for Governor, virtual town hall meeting, June 1, 2010

Texas Railroad Commission, Oil Production and Well Counts (1935-2009), accessed July 21, 2010

The Energy Information Administration, Texas 2003, Distribution of Wells by Production Rate Bracket, accessed July 21, 2010

The Department of Energy, Marginal & Stripper Well Revitalization, accessed July 21, 2010

National Wind, Minnesota Wind Facts, accessed July 21, 2010

The Energy Information Administration, Average Retail Price of Electricity to Ultimate Customers by End-Use Sector, by State, accessed July 22, 2010

Interview, Jeremy Drucker, spokesman, Matt Entenza, July 21, 2010

Interview, William Holmes, attorney, Stoel Rives, July 21, 2010

Interview, Ramona Nye, spokeswoman, Texas Railroad Commission, July 22, 2010

Interview, Joel Morrison, Director, Stripper Well Consortium, July 22, 2010

More

The Humphrey Institute

Note: From now until the August 10 primary PoliGraph will appear more frequently and focus on statements by the three Democrats competing for the DFL nomination.

Comments (4)

Any chance subsidies and government handouts were taken into account?

Posted by AAA | July 23, 2010 12:45 PM

You continually refer to "profitability," but you only seem to be talking about gross revenue, not profit. How do the costs of the windmill compare to the oil rig?

Posted by Harry | July 23, 2010 1:48 PM

Some factors not included, which may bias the result include:

-while the revenue for each turbine may be $260,500 annually (on average,) UNLIKE a Texas oil well, most of that revenue comes from Minnesota ratepayers, who are mandated to buy the output.
-As a previous commenter noted, about 1/3 of the $260,500 (on average) comes from the federal government in the form of tax subsidies
-Unlike a Texas oil well, the revenue per turbine takes money from one part of the state, and sends it to another, and most likely, much of the profit belongs to an out of state developer
-The analysis doesn't factor in the cost of transmission or back-up fuel needed to ensure that the system remains reliable, and which therefore makes the cost to ratepayers higher than simply the cost of the turbine.

Your analysis is insufficient for at least these reasons. Only in a very narrow sense is Entenza's claim correct. The turbine manufacturer probably does do as well as a Texas oil well owner. But, the inference that the state as a whole does better as a result is not necessarily true, and in fact is most likely false for the reasons articulated above.

Posted by Mike Franklin | July 23, 2010 2:09 PM

Ms Richert,

Oil is not used to generate electrictiy. We mostly use it to make gasoline.

Electricity is generated from coal, natural gas, nuclear, and hydro - for the most part.

Wind generated electricity is the most "successful" of the renewables. However it is much less reliable of those listed above - it is also considerably more expensive.

Now repeat after me. Oil is for gasoline. Oil is NOT for electricity.

To infer that wind and oil is interchangeable shows your ignorance.

Sorry to be so blunt.

Posted by Duke Powell | July 23, 2010 7:19 PM

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