Library filed under Taxes & Subsidies
Editor's Note: This article is available via the link below.
When considering local bylaws regulating wind turbine development, towns need to consider whether and to what degree they should be encouraged. The question of how much revenue they might generate for the town will be among the first issues raised. To determine this, there are many things a town with land suitable for commercial wind development needs to consider. Particular attention needs to be paid to long-term trends as well. This paper explores some of these factors and their implications.
In community after community where industrial-scale "wind farms" have been proposed, mundane and sparsely-attended board meetings have been transformed into standing-room-only affairs. Residents and property owners are anxious to know whether rumored plans to construct twenty, fifty or even a hundred of the 400-foot tall wind turbines are "a done deal." Most significantly, the electorate wants to know the extent to which their town has the power to decide whether or not wind farms will dominate their rural landscape. /p
BBC Research & Consulting's 2005 report for the National Wind Coordinating Committee that studies 9 wind plant sitings in an effort to identify circumstances that distinguish welcomed projects from projects that were not accepted by communities.
"These projects are very expensive and wouldn't happen without tax subsidies," he [Glenn Schleede] said. "Ordinary taxpayers are getting taken to the cleaners on this."
Glenn Schleede examines the financial incentives available to owners of industrial wind energy and how taxpayers and utility customers are picking up the tab.
This page [author's website] is dedicated to economic information that applies to wind-power projects anywhere in the United States and specifically applies to the Highland New Wind Development project proposed for the northwestern corner of Highland County, VA. Let me say right up front that I am not an economist or tax accountant. I will try to compile factual information on the economics of wind power along with the opinions of recognized experts in this field. Editor's Note: This provides a good overview of the production tax credit, capacity factor, renewable portfolio standards, renewable energy certificates. and accelerated depreciation. Readers are encouraged to visit the author's site via the link below for the most current version, e.g. the author is planning to update the production tax credit information to the current prevailing rate of 1.9 cents per kWh.
To maximize the advantages that the production tax credit offers, however, requires a closer look at how wind power facilities are financed. Unlike most power projects which are financed based on their revenues from power sales, financing for wind power projects depends heavily on the production tax credits.
....there are too many forms of subsidies and favoritism to determine accurately which energy sources get the best treatment, although some interpretations can be made. In any case, those who argue that their technology should receive more in order to compensate for another technology’s subsidies are being disingenuous. Congressional subsidies in the latest energy bill will only make matters worse.
Given its location, Gray County would have displaced mostly NGCC and some oil fired generation. Using the average 2003 NGCC heatrate for the sub-powerpool (7,478 Btu/kWh) and the average CO2 content of natural gas (116 #CO2/MMBtu), the project may have displaced only 158,000 tons of CO2 in 2003 (0.00207% of 2003 US estimated emissions according to the USDOE report entitled Emissions of Greenhouse Gases in the United States, 2003 (issued December 13, 2004). (Note in 2002, the output was less and it would have displaced only 140,000 tons).
"This presentation will review financing of renewable projects based on available incentives: ••Benefits and challenges. ••Equity and debt structures. ••Sponsor/Investor issues. ••Debt/equity issues.
Absent special political privileges - federal research and development subsidies, tax breaks, and state RPS programs - today's renewable-energy industry, or most of it, would not even exist. Three decades, $14 billion in direct federal support, and untold billions in state taxpayer and ratepayer subsidies have failed to make "green" energy economically self-sustaining. Enough is enough. Congress should terminate, not expand, its patronage of this boondoggle.
In the UK, the parallel objective is to generate 10% of the UK’s electricity from renewable sources by 2010. Renewable electricity has become synonymous with CO2 reduction. However, the relationship between renewables and CO2 reduction in the power generation sector does not appear to have been examined in detail, and the likelihood, scale, and cost of emissions abatement from renewables is very poorly understood. The purpose of this report is to analyse a wide range of technical literature that questions whether the renewables policy can achieve its goals of emissions reduction and power generation. To some, renewable energy has the simple and unanalysed virtue of being “green”. However, the reality of this quality is dependent on practical issues relating to electricity supply. ......In conclusion, it seems reasonable to ask why wind-power is the beneficiary of such extensive support if it not only fails to achieve the CO2 reductions required, but also causes cost increases in back-up, maintenance and transmission, while at the same time discouraging investment in clean, firm generation.
A necessary step in any attempt to understand the outlook for US energy supply and demand Comments by Glenn Schleede for The owners and members of Associated Electric Cooperative, Incorporated At their 2004 Annual Meeting in St. Louis, Missouri
Government agencies and the wind industry have successfully portrayed wind-generated electricity as "green" and as a price-competitive, potentially significant alternative source of power which could reduce dependence on 'dirty' fuels. While wind generated electricity may make sense in some circumstances, industry and government claims for its widespread use are not currently supported by sound science or economic analysis of costs v. benefits.
Wind power is the fastest growing source of electricity generation in the United States. In 2003, the installed U.S. wind power capacity increased by 1,700 megawatts (MW) to a total of 6,374 MW.1 Most of this additional capacity came in large projects of 50 MW or more, typically owned by strategic investors who have developed or acquired a portfolio of projects. As wind power generation continues to grow, these large projects and experienced developers will likely continue to dominate wind power development. Because of their scale and access to capital, these large projects are the fastest way to move towards increasing renewable energy’s share of the generation mix—and they provide significant economic benefits to the communities where they are located, from payments to farmers for wind rights and turbine easements to construction-related spending to permanent operations and the maintenance staff at each project. At the same time, there has been a growing interest in community wind power development. While the notion of community wind varies, these projects are generally smaller scale (less than 20 MW), and are locally initiated and owned. Projects range from single turbines erected by municipal utilities, school districts and tribal reservations to larger multi-turbine installations owned by one or more local investors and landowners. These projects may capture and retain more of the economic benefits locally (both construction-related and ongoing returns) and drive continued reinvestment in the communities. As a result, community wind projects often enjoy more favorable community support than large-scale commercial projects. There have been numerous publications and conferences on community wind development, but less specific attention on options for project structuring and financing. The goal of this handbook is to identify critical financing issues and present several possible financing models that reflect the differing financial positions and investment goals of various project owners/developers. The handbook includes six sections: • Section I describes various models for community wind power ownership. • Section II examines sources of equity and debt financing and the steps necessary to secure this financing. • Section III identifies federal grant and loan programs and state incentives for wind power development. • Section IV reviews the federal tax incentives supporting wind power projects, the impact of these incentives on project economics, and limitations on utilizing these incentives. • Section V examines power purchase agreements and the value of green tags to community wind power projects. • The Appendix contains a list of operating community wind projects in the United States and a list of project consultants and financing resources.
Promotional brochure for conference on financing wind power projects held at the Metropolitan Hotel, NYC, December 3-5,2003
Many people accept the well-publicized claim that windmills will be able to supply a significant share of our country’s growing requirements for electricity. They also believe that wind energy is environmentally benign and a way to avoid emissions from other sources of energy for electric generation. Political leaders in windy states have even been persuaded that “wind farms” will provide economic benefits, principally through rental payments to landowners. As proposals to build “wind farms” have proliferated, however, the adverse impacts of wind energy are becoming clear to a growing number of citizens, consumers and taxpayers. They are learning that “wind energy” has adverse environmental, ecological, scenic and property value impacts. They are learning that many of the claimed benefits of wind energy are misleading or false, and that the true costs of wind energy are higher than advertised -- with those higher costs falling on taxpayers and electric customers.
Dr. Richard Truly, Director, National Renewable Energy Laboratory Dear Dr. Truly: It has come to my attention that an employee of the National Renewable Energy Laboratory (NREL), Mr. Larry Flowers: 1. Asserted, during public “forums” on wind energy held on March 25, 2003, in Ludington, Michigan, that I am in some way associated with the coal industry and, therefore, my analysis and writing concerning wind energy should not be considered credible. Over 150 people attended these public forums. 2. On March 27, 2003, distributed via email to one or more participants in the Ludington forums the attached undated, unsigned paper which questions the independence of my work, questions the truthfulness of my claim that my work on wind energy is self-financed, and makes other false and misleading statements. Mr. Flowers’ email forwarding the paper includes the following statement: “MI wind colleagues: here is a brief piece written in response to Glen [sic] Schleede misinformation. I suggest you distribute this to participants in the Ludington meeting…”