WindAction Editorials filed under Taxes & Subsidies
“The combination of the federal PTC and state RPS policies has shielded wind developers from the basic supply and demand forces present in a healthy competitive market. As a result, we are fast-tracking the construction of expensive renewable resources that are variable, operating largely off-peak, off-season and located long distances from where the energy is needed.”
Proponents of wind energy insist that adding renewable energy to the grid reduces the market price of electricity by displacing resources with substantially higher operating (fuel) costs. Various studies have been performed that model the "price suppression" effect of wind and solar on ratepayer bills, however, assessing the actual impacts of an operating project on rates has proven more elusive.
This year, the wind industry added just 1.6 megawatts of new operating capacity in the United States, a 0.0027% increase over 2012 installations.
"Ignoring how competitive markets operate-and pretending that wind energy is exempt from the basic rules of economics-will not change the fact that windpower is an expensive, unpredictable resource that cannot compete without enormous public hand-outs. If the PTC were permitted to expired today, the wind industry might be forced to increase its efficiencies and lower project costs, but the effect on electricity prices at large would likely go unnoticed."
After 20 years of tax credits, the production tax credit (PTC) was scheduled to expire at the end of 2012.
It took a last minute change to a highly controversial bill and the last vote of the 112th Congress for Big Wind to eke out one more extension to the Production Tax Credit (PTC). With the dust now settling, it's worth examining what happened.
“The sheer ridiculousness of the [six-year, front loaded PTC extension] outraged Congressional members and may well have changed the debate. It’s NO coincidence that within 24-hours of AWEA’s poorly received proposal, Denise Bode bailed. A move that sudden suggests the industry thinks it’s better off without her and probably without AWEA’s inflexible, out-of-touch campaign.”
We wish to thank William P. Short III* for his invaluable contribution to this editorial.
The United States is in the midst of a fiscal crisis. If Congress and the White House are unable to reach agreement on spending by January 1, crushing tax increases and draconian budget cuts will go into effect sending the country's already weakened economy into another destructive recession.
Last month, unity was shattered within the wind industry when energy-giant Exelon Corporation broke ranks with other renewable-energy developers and asked Congress to let the production tax credit (PTC) expire in December. Exelon rightfully argued that the subsidy was distorting competitive wholesale energy markets and causing financial harm to other, more reliable clean energy sources.
This month, a coalition of brand name corporations sent Congressional leaders a letter urging extension of the wind production tax credit ('PTC'). It was the second such letter sent this year signed by many of the same companies and with the same message: Failure to extend the PTC will raise consumer electricity prices and harm the bottom lines of companies who purchase renewable energy.
Wind proponents insist the industry is one of the fastest growing sectors of the American economy having doubled U.S. nameplate capacity since 2008.
The American Wind Energy Association pumped millions into an aggressive political campaign aimed at securing the PTC's extension. It released the Navigant jobs study, funded a full-time media war room and lined up President Obama, DOE's Secretary Chu and Interior Secretary Ken Salazar as wind industry hucksters. Coordinated endorsement letters signed by the Governors' Wind Energy Coalition and brand name corporations were sent to Washington calling for immediate action while newspapers around the country published editorials rehashing the same talking points on why the PTC should be extended beyond 2012.
Tens of thousands of acres across New York State have been transformed into sprawling electric generating facilities -- 18 in total -- where nearly 1,000 industrial-scale wind turbines consume the landscape and threaten communities in their way.
The debate surrounding the Production Tax Credit (PTC) intensified last quarter following several high-profile attempts by Congress to extend the credit before it expires at year-end. Industry warnings of precipitous declines in clean-tech investment and imminent job losses have reached a fevered pitch. The New York Times, for example, reflexively accused budget-hawks in Congress of being preoccupied with safeguarding the dominance of the oil and gas industries.
The Big Wind lobby has descended on Washington DC and its objective is singular -- secure a four-year extension of the Production Tax Credit ('PTC'), the 20-year ‘temporary' subsidy most credited for market growth in the wind sector. The PTC is due to expire at the end of this year.
In recent weeks, wind developer Terra-Gen terminated plans to build its Horseshoe Wind Farm in Illinois, NextERA suspended the permitting process for a 150-megawatt project in South Dakota and Iberdrola announced its Desert Wind Energy Project in North Carolina was delayed and might be scrapped altogether. In each case, company officials blamed current market conditions and the inability to secure a long-term power contract with area utilities.
The House of Representatives is working to slash federal discretionary spending.
In the waning hours of the tax bill debate last December, the Obama Administration and GOP leaders released the terms for continuing the Bush-era tax cuts. The framework negotiated between the parties initially omitted any reference to extending the renewable energy programs introduced under the American Recovery and Reinvestment Act of 2009 (ARRA), which were scheduled to sunset last December.
The pressure is on to finalize the proposed tax bill before Congress that would extend the Bush-era tax cuts for all Americans. Last minute amendments are expected in order to garner support among lawmakers who oppose the initial agreement forged between the White House and key Republicans. The worry now is whether the bill will become a vehicle for piling on more spending as the lame duck session finishes up.