The production tax credit
(Posted January 28, 2008)
The wind industry has continuously lobbied Congress to enact a long-term extension of the federal production tax credit (PTC) since the incentive was first introduced in 1992. The PTC now represents up to one-third the return on a given wind farm. While it's true that fossil fuel generation also receives federal subsidies, when measured on a per kilowatt hour basis, wind is paid significantly more for a very minor percentage of overall generation (1% of U.S. consumption).
The question becomes whether the public is receiving value in return for the billions "invested" to date. Three basic limitations of wind generation suggest the investment may not be worth it:
- wind energy can only supplement other fuels, mainly natural gas, and does not eliminate the need to build conventional power plants with reliable generation;
- wind projects built far from population centers require enormous investments in transmission, a separate cost passed on to ratepayers;
- reports consistently show that as the need for electricity rises, output from most US wind farms drops (it's out of sync with time of day, time of year demand).
The PTC should encourage reliable, usable generation produced close to where and when the energy is consumed. Presently, the PTC does not!