The Wind PTC’s Adverse Impacts on the Electric Sector
David C. Brown, Senior VP Federal Government Affairs & Public Policy|September 10, 2012
The Exelon presentation details how the wind production tax credit is distorting the wholesale power market and financially harming other clean, reliable resources. An excerpt of the presentation is below. The full presentation can be accessed by clicking on the link(s) at the bottom of the page.
The Exelon presentation details how the wind production tax credit is distorting the wholesale power market and financially harming other clean, reliable resources. An excerpt of the presentation is below. The full presentation can be accessed by clicking on the link(s) at the bottom of the page.
The Wind PTC Distorts Energy Markets
Wind Power Producers Pay the Market to Run to collect the PTC
• To collect the PTC, wind producers increasingly engage in negative pricing - paying the market to let them run, when there is little demand for their power, ultimately crowding out base load generation like coal and nuclear.
• For example, in western Texas in March 2008, prices were negative 33% of time largely due to wind producers attempting to collect the PTC.
• Because the PTC is worth approximately $35 per megawatt hour (pre-tax) of electricity produced, a wind producer could pay the market $10 to take their power and still collect $25 from taxpayers!
• This threatens around-the-clock base load power producers, forcing them to pay to run their plants as well or to shut down for long periods of the day when their power is needed most.
Crowding out Private Sector Energy Investments
• Oversupply of wind is causing market distortions which is artificially suppressing prices and hampering investments in base load technologies.
• Investments in traditional energy sources like coal, natural gas, and nuclear are not being made because there is a glut of subsidized and intermittent wind in certain areas
