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Franz's Windpower Critique Faces a Fact Check

Lawmaker stands by claims about property values, costs, jobs, and subsidies

March 2, 2011 | By Glenn Puit
and Jim Dulzo
Great Lakes Bulletin News Service

  State Representative Ray Franz criticized windpower development at a recent community meeting about Duke Energy’s proposed Benzie-Manistee wind farm proposal

A newly elected state representative who says he doesn’t believe in manmade climate change and supports building a nuclear power plant in northern Michigan is standing by his recent claims about wind power, despite fact checking that indicates most of his assertions were incorrect.

State Representative Ray Franz spoke in January to approximately 300 people at the Garden Theater, in Frankfort, who were seeking information about Duke Energy’s proposal to erect 112 utility-scale wind turbines in Benzie and Manistee Counties. The audience had just watched the anti-windpower polemic, Windfall.

Representative Franz told the crowd he believes anecdotal evidence that turbines dramatically decrease property values, that wind is not price-competitive with coal power and eliminates jobs, and that subsidizing wind power in Europe has failed.

But theGreat Lakes Bulletin News Service found multiple, highly researched studies and reports contradicting Mr. Franz’s assertions. In a subsequent interview with GLBNS, however, Mr. Franz stood by his original comments, discounted manmade climate change, and endorsed building a nuclear power plant along Lake Michigan’s shoreline.

“I absolutely agree with clean energy, but mine is different than yours,” Rep. Franz said. “I support nuclear power. I think it is the ultimate clean energy. That is the ultimate future energy source of Michigan.”

Wind Farms and Property Values
Speaking to the crowd at the theater, Representative Franz warned that a major wind farm could harm local property values.

“That is going to have the most dramatic and immediate impact that I can tell,” Mr. Franz said. “In doing some studies and talking to various realtors, I understand that it’s anecdotal, but almost to a person they claim that property values some estimate close to a 40 percent decline.”

Fact Check:

GLBNS found several large-scale studies contradicting Mr. Franz. The studies indicate wind power has little impact on property values and that any effect is usually positive.

The most recent study, released last year by the U.S. Department of Energy’s Lawrence Berkeley National Laboratory, analyzed 7,500 home sales within 10 miles of 24 wind facilities in nine states.

Researchers visited all homes to collect on-site information, including whether turbines were visible from the home. They analyzed home sales between 1996 and 2007, starting before each project announcement and ending well after turbine operation began.

“Neither the view of wind energy facilities nor the distance of the home to those facilities was found to have any consistent, measurable, and significant effect on the selling prices of nearby homes,” the report said. “No matter how we looked at the data, the same result kept coming back—no evidence of widespread impacts.”

Even for homes located within a mile of a wind project, the researchers found no persuasive evidence of consistent property value impact.The full report is here.

A 2003 federally funded study by the Renewable Energy Policy Project looked at wind power’s effect on home values within five miles of nine projects in seven states before, during, and after installation. It reached the same conclusion.

“We found that for the great majority of projects the property values actually rose more quickly in the view shed than they did in the comparable community [without a wind farm]. Moreover, values increased faster in the view shed after the projects came on-line than they did before [the project was built]. Finally, after projects came on-line, values increased faster in the view shed than they did in the comparable community.”

In his interview, however, Mr. Franz produced individual reports claiming wind turbines harm property values. They included a Watertown Daily Times news article, a letter from an individual, a blog posted by an upstate New York realtor, and several comments, letters, and summaries by realtors or appraisers on an anti-wind Web site.

Yet Representative Franz indicated that property rights override other considerations.

“My position on wind turbines is this is a private property issue and as long as it meets local zoning, private property trumps just about anything else,” Mr. Franz said.

Clean Energy’s Cost and Jobs
State Representative Franz also said wind power is too expensive, soaks up too many tax dollars, and kills jobs.

What happens is you have significant subsidies that cost tax dollars that drive down the economy and also drives up the cost of electricity,” Mr. Franz said. “You talk to Wolverine, Consumers, DTE…it’s almost double what it costs to generate regular electricity. So you combine the increased cost of electricity with the taxes to support the subsidies, the overall impact on the economy is so negative that it actually costs jobs for every job created.”

Fact Check:

Wind is now viewed as cost competitive with new coal- and natural gas-fired power plants in many wind-rich situations.

For example, the State of Michigan recently contradicted Mr. Franz’s assertions. A state report found that the contracted price of utility-scale wind power recently installed in Michigan was cheaper than the contracted price of power from new coal plants in other states.

Consumers Energy, the report added, cut its original, $78 million estimate for meeting its clean-energy mandate to $23 million.

John Sarver, formerly of the State of Michigan’s energy office, told GLBNS it’s important to make fair comparisons between clean and fossil energy.

“Well, [wind looks] too expensive when people go out and compare old, existing power plants to new, commercial wind farms,” Mr. Sarver said just before the state released its report. “But any new power source is going to be more expensive [than any old one].”

Reuters reports that large-scale wind-turbine generation costs are now as low as 6 to 8 cents a kilowatt-hour in some windy places, while that number is 3 to 7 cents for “old” natural gas and coal power.

And clean energy of any sort—including solar power, the priciest option—is the clear winner, proponents say, when considering all costs of energy production, not just the price to consumers, Mr. Ellis said. Pointing to environmental and health costs, he asked,

What are the real costs of blowing up mountaintops to get at coal seams, which buries valleys and streams with rubble?

“Unless you find a way to consider those costs, it’s sort of nonsense to say this is cheaper than another,” Mr. Ellis said.

Mr. Sarver said wind power is important to Michigan’s energy and economic future.

“It's a clean power source and it's a local Michigan resource,” Mr. Sarver said of wind. “Having that diversified resource base is really smart, kind of like having a diversified stock portfolio. It’s worth something to know what your costs will be 15 or 20 years down the road (for wind) while it's safe to assume the cost of fossil fuels are going up significantly.”

Mr. Franz’ claim that renewable energy eliminates jobs is also off the mark. Examples abound in Michigan, which is now the nation’s fourth-largest center for solar power manufacturing. Crain’s Detroit Business cites a report by the Michigan Economic Development Corporation that identifies 25 companies in Michigan as parts manufacturers for wind farms and another 900 as providers of design, engineering, machining, automation, or assembly services.

Mr. Franz said he relied on a study from King Juan Carolos University, in Madrid, for his claim that clean-energy subsidies hurt the economy and eliminate jobs. But an online report from Greenpeace USA points out that the study’s methodology has been widely dismissed—by, among others, the Spanish government, The Wall Street Journal, and, most recently, the National Renewable Energy Laboratory, which said that the report’s author’s main conclusions simply “were not supported by their work.”

European Wind 'Subsidies'
Representative Franz also said wind projects in Europe are highly subsidized, and that cutting off those subsidies effectively halts windpower development.

“We’ve seen the response of the stop[ping] of subsidies in Denmark and Spain [for renewables], most notably Denmark,” he said. “They’ve quit. The development of renewable energy has almost come to a complete halt. Same way in Denmark. Denmark quit a couple of years ago subsidizing their wind farm...They’ve quit subsidizing and any further developments in Denmark have come to a screeching halt.”

Fact Check:

The European “subsidies” Mr. Franz referred to are more properly called “feed-in tariffs,” or FITs.

FITs, which triggered rapid growth of solar and wind power in Europe, are rates utilities pay to private entrepreneurs who feed their own solar or wind power into the grid. Well-designed FITs avoid government subsidies and investments; instead, they employ private capital and the profit incentive to encourage clean-energy development.

Recently, there have been significant cuts to—or outright elimination of—some FITs in some countries, including, as Mr. Franz said, Denmark and Spain. But FIT advocates say that’s for two reasons they find encouraging.

First, governments regularly lower FIT rates for new projects in order to spur price competition and allow consumers to benefit from wind and solar technology’s steadily falling costs.

Second, so many entrepreneurs are pursing FIT opportunities that they are overwhelming utilities’ ability to keep up. Germany, Spain, and France added unscheduled cuts to their FIT rates last year “to slow a torrent of projects by developers and speculators,” according to Bloomberg News, which, like Mr. Franz, refers to FITs as “subsidies.”

Tony Ellis, a senior research fellow at the University of Massachusetts’ Wind Energy Center, confirmed that European FITs are working well.

“It is effective in the sense they got a very fast build out,” Mr. Ellis said.

For example, according to an Environmental and Energy Study Institute brief, Germany’s pioneering FITs policy, established in 1991, took the country from zero to 22,000 MW of windpower capacity—in peak power the equal of 22 very large coal plants—in 16 years.

“With the help of this policy,” the EESI brief states, “Germany was able to meet its 2010 target of 12.5 percent renewable electricity in 2007, while creating 249,000 jobs in the country’s renewable energy sector. FITs are also a major reason why Germany has the world’s largest photovoltaic solar market.”

The brief also indicates that Denmark’s wind energy production grew from 500 megawatts in 2003, just before FITs began there, to 3,000 MW in 2005, when they ended—a 600-percent increase in 12 years. Denmark now obtains 21 percent of its electricity from wind turbines; individuals or cooperatives own 83 percent of wind capacity.

The brief added that the policy created 21,000 manufacturing jobs in Denmark—whose population is slightly more than half of Michigan’s.

Mr. Ellis explained that Denmark and Spain had good reason to slow down clean energy development.

“Spain and Denmark are pretty much there in terms of how much wind-based electricity they can put into the grid and still keep a stable system,” he said. “It’s largely not a question of costs. It’s a question of [grid] capacity.”

Research by Toby B. Couture, a National Renewable Energy Laboratory economist turned private energy markets analyst, looked closely at claims that Spain’s renewables experience discredits clean energy and feed-in tariffs.

He said Spain, where wind power forms 16 percent of its national energy portfolio, established a solar FITs policy that was fatally flawed because it set tariffs far too high and avoided development caps. That produced a huge solar-energy “bubble” that did require a genuine government subsidy to repair the economic damage.

Spain’s lesson, he said, “is that while policies like feed-in tariffs can fuel a rapid scale-up in renewable energy technologies, they can all too easily exceed policymakers’ expectations if proper adjustment and oversight mechanisms are not in place.”

And Mr. Ellis pointed out that America’s fossil fuel industries have received massive assistance from government programs and tax incentives for many decades.

“Every [American] source of energy is subsidized,” he said. “The subsidies that wind has gotten...were specifically mentioned as being needed to counterbalance what oil and gas get.”

Glenn Puit is a policy specialist for the Michigan Land Use Institute; reach him at glenn@mlui.org. Jim Dulzo is the Institute’s managing editor. Reach him at jimdulzo@mlui.org.

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