A recent paper published in Nature Energy suggests the need for a more considered approach to regulating wind energy, especially in states like Texas, Oklahoma, and Iowa that have seen large investments in wind farms in recent years.
The Growth of Wind Energy
Wind turbines are designed to harvest the kinetic energy from wind and convert it into mechanical power that can be stored and sold to the power grid. Instead of using electricity to move the blades, like a fan, the wind moves the turbines, turning a shaft which itself is connected to a generator that makes electricity.
Wind energy used to be prohibitively expensive to be considered a meaningful player the U.S.’s overall energy mix, but that has changed dramatically in the last twenty years. Developers have invested in large wind farms, first identifying areas with robust wind resources, and then negotiating with landowners for wind rights and with utilities for power purchase agreements, before finally constructing and installing the necessary turbines. Domestic capacity has skyrocketed from 2,502 MW in 2000 to 90,550 MW in 2018; to put this in perspective, the total summer electricity capacity of the U.S. in 2016 was 1,074,333 MW. This, along with technology improvements, has led to a reduction in price such that wind is now much more competitive with other sources of energy on the market. In 2017, wind energy generated 6.3% of the U.S.’s electricity.
Wake Effects and the Nature Energy Paper
Wind, like water and oil, is a free-flowing resource that, when left to the open access state of nature, is similarly vulnerable to a tragedy of the commons. When a turbine is gathering energy from the wind, it has a “wake effect” on land in the downwind direction. That is, a wind turbine will generate less wind energy if it is situated in an area that is usually downwind of another operating wind turbine.
Wind farms are already laid out in such a way as to reduce wake effects between turbines on a given farm, as the owner of the farm has a clear incentive to maximize her production. But there is relatively little coordination between wind farms to reduce or mitigate the wake effect that one wind farm might have on another. And governments at the federal, state, and local levels have a strong public policy interest in efficient use of our nation’s wind resources as we gradually transition to a more sustainable energy portfolio.
The Nature Energy paper argues that wake effects may be more significant that previously thought. The paper, authored by J. K. Lundquist, K. K. DuVivier, D. Kaffine, and J. M. Tomaszewski, looked at three wind farms in Texas: Loraine, Roscoe, and Champion. Roscoe is normally downwind of Loraine, while Champion is not normally affected by either. This allowed Champion to function as the control wind farm, while the authors studied the wake effects of Loraine on Roscoe.
The results of the study were striking, for both the size and breadth of the wake effects measured. First, Lundquist et al. estimated a total generation loss between November 2009 and December 2015 of between 63,485 and 305,345 MW, roughly 5%. This translates to lost revenue for Roscoe of between $710,000 and $3,290,000 annually. Second, the authors describe simulations which were run based on their measurements which suggest that one wind farm can have wake effects 50+ km downwind. Given that 90% of wind farms in the U.S. are located within 40km of another wind farm, the wake effect problem is an important one for policymakers to grapple with.
Law students may remember discussions of oil and water rights from their 1L Property course. These resources were originally analogized to wild animals, where the Rule of Capture was the legal test. But the Rule of Capture turned out, unsurprisingly, to result in inefficient resource use. Jurisdictions where these resources were important had to come up with legal and regulatory solutions to the tragedy of the commons that otherwise ensued. Texas and other states responded by enacting well-spacing and pooling laws to prevent overuse as well as predatory practices like tunneling under another owner’s land so that the oil flows to a different area.
So how should governments maximize wind resource efficiency? Current regulations, to the extent they exist at all, are mostly focused on aesthetic, rather than efficiency, concerns. One way to attack the problem is to use Guido Calabresi’s and Douglas Malamed’s “cathedral” framework. The government would pick which party (either the upwind farm or the downwind farm) gets the entitlement to the wind and then whether that entitlement is protected by a property rule or a liability rule. In a recent law review article, Professor Troy Rule suggests that “Rule 4” is the correct choice under this method. The upwind farm would thus have an entitlement to operate a wind farm, but the downwind farm would have a right to buy an injunction. If voluntary bargaining failed, the downwind owner could ask a court to decide the economic loss that the upwind owner would suffer from an injunction, and then pay that amount to obtain one.
A second method would be to borrow ideas in the water regulation space, establishing a permitting system anchored by the “reasonable use” concept of riparian water regimes. This would be a more hands-on, command-and-control method: no wind extraction would be permitted except pursuant to a permit, and permits would only be issued to the extent that the proposed use was “reasonable.”
As a third approach, governments may simply try to force upwind farms to internalize the externalities the farm creates. This could be accomplished with a marginal turbine tax on the upwind farm that is set to be equal to the marginal wake externality. However, as more and more wind farms are constructed, the externalities become increasingly difficult to calculate and thus this system may be unworkable.
Finally, drawing again from oil and gas law, governments could force unitization. Under this regime, all wind farms in a given region would be organized under a regional wind cooperative, where membership was mandatory.
Regulation of the use of wind resources is clearly still in its infancy, and depending on the strength of wind resources in a given area, a single regime may not work for every locality. However, given the sizable impact of wake effects and the importance of efficient harvesting of domestic wind, more research and experimentation with potential legal regimes is clearly needed.