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Subsidies are blowing in the wind

The renewable energy source is all the rage in Texas, growing by 60 percent last year alone. It's a fave of the federal government ...According to one federal estimate, wind generators get more than $23 in federal incentives for every megawatt they produce. That compares with 25 cents for natural gas, 44 cents for coal and $1.59 for nuclear power. ...Texas is also working on another state sweetener for wind - almost $5 billion of new transmission lines.

Just how much love - and money - do we have to shower on wind power?

The renewable energy source is all the rage in Texas, growing by 60 percent last year alone. It's a fave of the federal government, too, with President Barack Obama approving the continuation of hefty tax credits and adding an option for cash grants from the treasury.

According to one federal estimate, wind generators get more than $23 in federal incentives for every megawatt they produce. That compares with 25 cents for natural gas, 44 cents for coal and $1.59 for nuclear power.

Texas is also working on another state sweetener for wind - almost $5 billion of new transmission lines to carry wind energy from the Panhandle to the Dallas-Fort Worth area and beyond. Throw in Texas' deregulated electric market, and it doesn't get much better than this for players in the wind-generation game.

Except there's more, millions more in property tax breaks and state tax credits. The Texas comptroller estimates that wind companies avoided almost $3 million in school taxes through 2007, and the savings will add up rapidly. Within the next decade, the comptroller says, wind companies in Texas will save $713 million from local tax breaks and... more [truncated due to possible copyright]  

Just how much love - and money - do we have to shower on wind power?

The renewable energy source is all the rage in Texas, growing by 60 percent last year alone. It's a fave of the federal government, too, with President Barack Obama approving the continuation of hefty tax credits and adding an option for cash grants from the treasury.

According to one federal estimate, wind generators get more than $23 in federal incentives for every megawatt they produce. That compares with 25 cents for natural gas, 44 cents for coal and $1.59 for nuclear power.

Texas is also working on another state sweetener for wind - almost $5 billion of new transmission lines to carry wind energy from the Panhandle to the Dallas-Fort Worth area and beyond. Throw in Texas' deregulated electric market, and it doesn't get much better than this for players in the wind-generation game.

Except there's more, millions more in property tax breaks and state tax credits. The Texas comptroller estimates that wind companies avoided almost $3 million in school taxes through 2007, and the savings will add up rapidly. Within the next decade, the comptroller says, wind companies in Texas will save $713 million from local tax breaks and credits - a bounty that's on top of their federal incentives.

A separate study last summer by economists at the University of North Texas forecasts much higher subsidies, including breaks from county and municipal governments. It estimates that companies will save $1.8 billion in the next 10 years on wind plants already installed.

"Generators needed all these incentives early, when they were establishing a market," said Terry Clower, a professor of applied economics at UNT in Denton. "It's a different situation now, and we should have a market test. If we don't provide these tax breaks, will they still come to town?"

That's a good bet, as long as the federal subsidy remains in place. Wind companies that invest $100 million will recoup more than $74 million in tax credits and accelerated depreciation alone, the UNT study says. The state subsidies are a bonus.

Obama's support for renewable energy makes the federal tax credit a priority, and that should reduce the need for states and local governments to give more help. Texas lawmakers could actually back off their business-friendly tax breaks for this industry, a suggestion that may be akin to tilting at windmills.

That's because the state already has the most important advantages for attracting wind players: the raw materials (plenty of wind) and the consumer markets (thanks to the new transmission lines).

Having deregulated electricity helps, too. It's easier, faster and cheaper to become a wind producer here, because a company isn't required to offer retail services, trump up support for transmission lines and get geared up for rate hearings.

Wind-power providers, including Boone Pickens, have been backing off expansion plans in Texas and nationwide. That's primarily because of the recession, tightening credit and the falling price of natural gas, which generally drives retail pricing in the state.

Last year, the United States become the world leader in wind-power capacity, passing Germany, according to a report released Monday by the American Wind Energy Association. More than 25,000 megawatts were installed by the end of 2008, enough to power nearly 7 million households. Texas, with 7,188 megawatts, is easily No. 1 among the states.

The trade group said more than 5,000 megawatts of new capacity will come online this year. The three-year extension of the production tax credits, along with Obama's approval of cash grants, are "considered critical for the wind industry to continue its growth" in the current economy, the group said.

In effect, the group is saying, the feds are doing enough to stoke this emerging industry in any state where it might work.

Meanwhile, Texas' additional tax breaks are having some unintended consequences, hurting school funding for the state. As part of Texas' economic-development program, wind companies can escape most of their school taxes and share the bounty with local districts.

In most cases, wind companies agree to divide the tax savings, usually keeping 60 percent. The rest goes to the districts - and it's excluded from the Robin Hood formula that shares money with needy schools.

This month, The Associated Press' Danny Robbins reported that 44 school districts will receive nearly $248 million over the next 10 years through these arrangements. Another 21 have struck deals, but the comptroller has not collected the data yet.

A wind-industry official told the AP that the local tax breaks helped lure producers to the state.

"They're going to be anywhere the wind blows, and that covers a million square miles," said Greg Wortham, executive director of the West Texas Wind Energy Consortium.

He should have said "anywhere in Texas." There may be competition between counties and regions, but the heaviest action in wind power is in this state.

We don't need to prime the pump any longer. And we sure don't need to be bidding against ourselves.


Source: http://www.star-telegram.co...

APR 15 2009
http://www.windaction.org/posts/19840-subsidies-are-blowing-in-the-wind
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