What does wind power and the electric car have in common?

As wind energy tax credits, which cover as much as a third of the costs of wind generation, set to expire at the end of the month, the industry has proposed a compromise plan to Congress. In a letter to Senate Finance Committee Chairman, the American Wind Energy Association outlined its proposal: basically extend the tax credits for six more years and slowly phase them out.

Wind has proven unable to compete on the free market. The wind industry is admitting that without taxpayers funding, along with extensive government regulatory mandates, wind energy will become obsolete. Bloomberg News reported, however, that the six-year plan could cost taxpayers $50 billion and “is a government giveaway that has run its course.” Forbes covered the issue in more detail:

Tax-blowing Boondoggle: Don’t Give Wind Energy More Credit Than It Deserves

…Since first being adopted in 1992, the “temporary” production tax credit for wind energy has ballooned from $5 million per year in 1998 to over $1 billion annually today. And even if ended, taxpayers are still obligated to cover nearly $10 billion in tax credits for projects built during the last decade. That’s in addition to an almost $20 billion debt for wind projects eligible under the Section 1603 extension, the renewable energy bailout of 2011. In many parts of the country, the PTC actually exceeds the wholesale price of power….

Figures provided by the Joint Committee on Taxation, the non-partisan congressional entity established in 1926 to assist legislators on tax-related matters, extending PTC without other preferential industry perks will add an estimated $12.18 billion from 2013 to 2022. Between 2009 and 2013, federal revenues lost to wind power developers amounted to about $14 billion, energy subsidy in the Obama stimulus package. Wind and solar each receive more than 50 times more subsidy support per megawatt hour than conventional coal, and more than 20 times more in terms of average electricity generated by coal and natural gas. According to a 2008 Energy Information Agency (EIA) report, the average 2007 subsidy per megawatt hour for wind and solar was about $24, compared with an average $1.65 for all others…

The industry said in its letter to Congress that if it loses the tax credit, 37,000 jobs could be lost. Several analysts have examined the costs to taxpayer per wind job wind versus per job in the oil and gas sector. According to Forbes, wind jobs cost taxpayers 15 times more, from $32,900 to up to $1.1 million per job when all government money is considered. Not all of those wind jobs are here in the United States, either, nor have they proven reliable as the industry begins to flat line, Forbes reported:

Of the stimulus grants so far, more than 80% have gone to wind farms (covering up to 30% of all project costs). A Meadow Lake wind development project in Indiana that is owned and operated by Horizon Wind Energy received $276 million. Horizon is a wholly owned subsidiary of EDP Renovaveis, a Portuguese company. The turbines are manufactured by Vestas in Denmark, and are mounted atop 350 foot towers imported from Vietnam. EDP and Horizon also own and operate the Blackstone wind farm in Illinois that received a $171 million grant. Yet after receiving over $50 million in U.S. stimulus subsidies, Denmark’s Vestas Wind Systems A/S, the world’s largest wind turbine maker, has now announced it will cut more than 800 jobs here and in Canada, representing 20% of its North American workforce. Its orders were down by 24% during the first half of this year compared with the same period in 2011… Vestas executives admitted that without more tax credits and stimulus funds, the company will have trouble competing, and told customers that “…it would stop nonprofitable projects. ” They emphasized that this is particularly true in Europe and America where demands for its products have plummeted.

On another front, how much has wind contributed to meeting America’s electricity energy needs? A major point of public confusion often advanced by promoters fails to differentiate between maximum total capacities, typically presented in megawatts (MW), and actual predicted kilowatt hours (kWh) that are determined by annual average wind conditions at a particular site. Since wind is intermittent, and velocities constantly change, it often isn’ available when needed most—such as during hot summer days when demands for air-conditioning are highest. Yet the PTC subsidy for wind creates an economic distortion called “negative pricing” which means that so long as they generate electricity, even during times when that power isn’t needed, producers still collect the tax credit for every kilowatt hour they generate.

Wind subsidies sound a lot like the Chevy Volt, the electric car that was heavily subsidized by taxpayers, but nobody really wanted. With the government giveaways, each car sold for about half what it actually cost to produce.

2 responses to “What does wind power and the electric car have in common?

  1. They’ll just bury the cost in the emergency appropriation for Hurricane Sandy relief that is currently coasting through the Senate, which has more pork hanging from it than a sausage factory.

  2. Right now wind is providing less than 1% of UK electricity demand.

    http://www.gridwatch.templar.co.uk/

    It’s just a wealth redistribution program, from the poor to the rich by way of a complicit government.

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