Wind Energy Tax Credits

The 1889 Institute, an Oklahoma state policy think tank, published this two-page fact sheet discussing how wind energy tax incentives offered by Oklahoma are detrimental to the state’s economy. A portion of the report is provided below. The full report can be accessed by clicking the links on this page.

Cronyism at the Root of Wind Power

Suppose someone proposes a contract that 10 percent of your electricity needs be met with cheap, abundant wind power. This sounds like a good deal, but then you notice in the fine print that you will have to pay for equipment that will separately meet that 10 percent of your needs by using other quite expensive sources of power for windless days, pushing up the average cost of electricity to over 15 cents per kilowatt hour. In addition, wind gusts and direction changes will cause voltage fluctuations that shorten the life of your appliances and occasionally cause temporary blackouts. This now sounds like a bad deal, one that no one would make voluntarily, but it’s the very deal wind tax credits are making for us. 

Some might say that wind power in Oklahoma is an economic boon. After all, wind-generated power was just recently sold to Tennessee. But in fact, the eastern grid, of which Oklahoma and Tennessee are a part, is not so integrated that as wind power fluctuates, Tennessee will ever feel the effects. In fact, Oklahoma will feel the brunt of wind’s inconsistency and unreliability even if 100 percent of its wind-generated power is sold out-ofstate. What’s more, the sale to Tennessee only means that Oklahomans are subsidizing the electricity use of Tennesseeans.

When economic benefits are claimed for tax-subsidized wind power, and jobs and windmills are pointed to as evidence of those benefits, the reality is these do not represent benefits, they represent costs. They are more like paying someone to repeatedly dig up the same sidewalk and pour new concrete again. Pointing to the fifth new sidewalk and the contractor with money in his pocket, who lobbied the city council for a job constantly rebuilding the same sidewalk, is not pointing to an economic benefit, but to pure, unadulterated economic waste.

That contractor needlessly replacing sidewalks as a result of lobbying, wining and dining his friends on the city council, is no different from those pushing for wind power today. Oklahoma’s legislature was not talked into tax subsidizing wind power because of global warming. The legislature was duped by the same fallacy Frederic Bastiat explained two hundred years ago – the seen and unseen. Wind turbines, new wires, and the people hired to put them in place are easy to see. Impossible to see are the lost opportunities and productive activities the money used to invest in wind power could have alternatively financed.

Renewable Energy and Other Energy Tax Incentives Should be Repealed 

Wind energy tax incentives in Oklahoma should be immediately repealed. During a time of economic turmoil for the state and large revenue shortfalls, tax incentives for wind are clearly not the best use of Oklahomans’ tax dollars. Repeal of the credit, allowing currently credited projects to continue, but not allowing credits for future projects, would minimize the incentive’s future impacts on the state’s revenues. It would also put wind on the equal market footing that it should have had all along.

1889 Institute Windenergy Tax Credits

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MAY 3 2016
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