Bill aims to snuff ‘green energy’ tax credit for good

ALEXANDRIA, Va. — While Virginia attempts to pump up wind power, congressional legislation is blowing the other way.

H.R. 1901, by U.S. Reps. Kenny Marchant, R-Texas, and Mike Pompeo, R-Kansas, would eliminate the wind production tax credit that subsidizes so-called “green energy” projects.

“(A credit) is a transfer of wealth, and when you cut it off, they’ll (taxpayers) spend it on other things,” said Randy Randol, a Virginia-based energy consultant. According to a document from Virginia’s Department of Mines, Minerals, and Energy, $3.6 million has been put up from federal  programs  for resource management research, planning and coordination in renewable energy this fiscal year.

Enacted in 1992, the federal PTC gives a rebate of 2.3 cents per kilowatt-hour for wind energy and generally applies to the first 10 years of a power company’s operation.

“The PTC has ballooned from a temporary boost for energy innovation into a massive special-interest handout for the now multibillion-dollar wind industry,” Marchant said in a statement on his website.

Virginia is doubling down, with Gov. Terry McAuliffe signing bills to boost renewable energy with additional state loan programs and tax credits. Current state incentives, according to the Virginia Department of Environmental Quality website, include a business energy investment tax credit and a residential renewable energy tax credit.

The business credit on federal income tax covers about 30 percent of expenditures, according to the Virginia Department of Environmental Quality website. The credit has no maximum for systems placed in service after 2008 and any small wind property is eligible up to 100 kilowatts in capacity.

The residential credit also offsets 30 percent of qualified expenditures. It has no maximum for systems placed in service after 2008, but according to the Virginia Department of Environmental Quality website, the cap on systems placed in service in 2008 was up to $500 per half kilowatt, with a maximum of $4,000.

Randol says such spiffs are no boon for consumers or ratepayers. “Virginia taxpayers are funding the subsidy to companies,” he said.

Because the wind isn’t always blowing, wind-driven power must have a backup, Randol notes. “You have to build an entire infrastructure that’s used only part of the time. The lower use of the same capital means higher rates for consumers.”

John Larson, a director in Dominion Power’s alternative solutions group, said the intermittent nature of wind and solar power is “a question everyone is grappling with.”

He estimated that wind turbines run slightly more than 40 percent of the time. “There is no other renewable resource that would operate 40 percent of the time,” he said.

Over the years, the PTC has been phased out, and then resurrected by industry lobbyists on Capitol Hill. Legislation like H.R. 1901 has been introduced before, and Randol predicted President Barack Obama won’t sign it if the measure clears the Republican-controlled Congress.

“(We) can get it passed in the House and Senate, but I doubt he’s going to sign it.”

Instead, Randol said the legislation is more of a “message to the tax guys … telling them, don’t even think about screwing around with this.”

“Every time they come up with these schemes (tax credits), we have to put a sunset on it,” he said. “When (proponents) first put this on the books, (Congress) should have said this won’t be around forever.”

Dominion, Virginia’s largest utility, says it generally supports tax credits that “contribute to our overall commitment to keep rates low.”

But Dominion’s recent attempts to install two wind turbines about 24 miles off the coast of Virginia Beach were halted when bids neared $400 million. The original estimate for the turbines was $230 million. A $47 million grant from the U.S. Department of Energy wasn’t enough to make up the difference.

“There’s no infrastructure (in the United States) to manufacture the turbines and cables,” Larson said. Turbines are the same height as the Washington Monument and many of the materials come from Europe.

“For a first kind of a project, for anything, there’s just a lot of uncertainty,” Larson said. “Dominion has worked very hard, and the entire team has been trying to find ways to reduce that cost.”

“Part of the Department of Energy program is to go out and build these demonstration projects and start working on how to reduce these costs. I think that’s honestly the stage we’re at today.”