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Clean Power us federal energy subsidies

Published on June 20th, 2011 | by Zachary Shahan

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Wind Power Subsidies Don’t Compare to Fossil Fuel & Nuclear Subsidies



us federal energy subsidies

After a long hiatus, I’m back to building on our relatively comprehensive page on World Wind Power.

The Short Story on Subsidies:

1. only taking some hidden coal subsidies out of the picture, coal would be 2-3 times more expensive than wind (and that’s if wind got absolutely no subsidies!);

2. nuclear energy received as much in subsidies each year from 1950-1990 as wind had received in total up to 2007, $3.75 billion (even with all those subsidies, many of which continue today, nuclear can’t compete with other electricity sources)… and this is not taking into account considerable environmental and storage externalities;

3. big oil got more money in tax breaks in 2011 alone ($4 billion) than the wind industry had received in total up to 2007 ($3.75 billion), and it is expected to get $77 billion more by 2021.

In other words, wind power subsidies are nothing compared to fossil fuel and nuclear industry subsidies. Without subsidies, electricity prices would be:

  • Wind Power: 6-7 cents/kWh
  • Nuclear Power: 11-20+ cents/kWh
  • Coal Power: 9-32+ cents/kWh

And coal and nuclear costs are expected to rise considerably in coming years while wind costs fall.

—>> Page 2: More on What Subsidies Are

—>> Page 3: Info on Big Oil, Coal, & Nuclear Subsidies

—>> Page 4: Info on Wind Subsidies & Summary

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About the Author

is the director of CleanTechnica, the most popular cleantech-focused website in the world, and Planetsave, a world-leading green and science news site. He has been covering green news of various sorts since 2008, and he has been especially focused on solar energy, electric vehicles, and wind energy for the past four years or so. Aside from his work on CleanTechnica and Planetsave, he's the Network Manager for their parent organization – Important Media – and he's the Owner/Founder of Solar Love, EV Obsession, and Bikocity. To connect with Zach on some of your favorite social networks, go to ZacharyShahan.com and click on the relevant buttons.



  • Cormagh

    I don’t get how you do your numbers. I just calculated the real cost of coal at 2 cents kWh based on 2,000 kWh per ton and current price of $54 per ton. Can you show your method and sources?

    • Bob_Wallace

      Let’s see…

      Your math doesn’t include:
      Capex
      Financing
      Operating expenses in addition to fuel (labor, repairs, property costs)
      Health damage costs
      Environmental damages
      Backup costs

      (The article is about subsidies. Not about the LCOE and external costs of coal.)

  • Timbastable

    The EIA projections are per MW capital costs rather than capital plus operating costs – they also factor in the full cost of infrastructure for linking technologies like offshore wind to the grid

    Once fuel costs are factored into the equation wind costs fall dramatically – the Mott Macdonald report produced for the UK Government (http://www.decc.gov.uk/assets/decc/statistics/projections/71-uk- electricity-generation-costs-update-.pdf (P87 fig 7.7)) puts CCS gas coal and offshore wind all in around £115 per MWh, by 2020 – and that based on what now look like optimistic assumptions on fuel prices.

    On wind costs I’d also be really interested to know the value of a direct and unaccounted subsidy to the capital costs of centralised power generators. They have the use of a grid brought and paid for by taxpayers over the last 100 years. Wind has to bear the full and direct cost of it’s grid connection which can be as much as a third of it’s capital cost.

    On externalities It’s Ray who has it horribly wrong in this debate, suggesting the Harvard externalities study is “nonsense”. It’s an attempt to quantify external costs – it may not be exactly right in its conclusions suggesting external costs should be ignored is absurd and utterly irresponsible.

    Externalised cost of fossil energy is the whole issue – and represents a huge current public cost and a potentially devastating future cost. The IIED worst case cost scenario for future climate change as high as $1200 trillion. External costs are real, are currently socialised therefore born by the public purse, – if that’s not a subsidy what is it? How can we possibly present a reasonable picture of the cost of subsidy if we don’t account for externalities?

    • http://cleantechnica.com/ Zachary Shahan

      Thank You. Very useful. And I completely agree — i try to never mention cost without mention externalities, and it’s a shame people don’t get that this is a very real cost of the electricity not accounted for in the price. (Have some more posts planned on this.)

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  • Agskupien

    where are the new posts?

    • Anonymous

      What are you talking about?

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  • Dennis

    Most of the “subsidies” you show for the oil industry is in the form of tax breaks.  These breaks allow oil companies a depletion allowance.  Although this is somewhat industry specific it is the equivalent to every other companies depreciation allowance.  

    When a wind farm purchases windmills they depreciate the windmills over a period of time as their value decreases.   When an Oil company buys property or leases property the cost includes the value of the mineral rights they are purchasing.  As they deplete the land from those reserves the land or lease is worth less and they take that deduction.  If you are going to call this a subsidy then you should call depreciation a subsidy also.  

    • Dkoplow

      Dennis is wrong. Depreciation is capped at 100% of the investment, though the timing can be accelerated for targeted sectors so tax write-offs are faster than the investment actually wears out (the case with windmills and many other energy investments). Depletion is entirely different — it is based on writing off a % of the value of production in a particular year. Over time, the write-offs often exceed the total investments. Subsidy numbers measure the excess of % depletion over standard cost depletion, picking up only the incremental value. Firms always have the option to use cost depletion and depreciation; any oil or gas company using % depletion instead (most of them that can) is doing so because the tax benefits are higher.

  • Anonymous

    Ray, 1st of all, I had not gotten to this comment yet because I was swamped with work (did not go to sleep until about 3:30am last night) and I don’t approve comments full of falsehoods or misrepresentations before I have a chance to respond — not what this site is about.

    Now, you don’t seem to understand what “full cost” means at all. You seem to think I’m talking about aggregating unrelated things. “Full cost” is looking at all the costs associated with one thing. Why should you only look at the price someone pays on their electric bill on not the price they pay at the doctor for the same thing? Doesn’t make sense. Sorry.

    Again, you seem to have missed a key point. BEYOND the fact that taking Externailities into account, wind is cheaper, if you want to look at the how much wind has received in subsidies at this point compared to how much nuclear (probably your baby) or coal received up to this point in their growth and development, wind would also clearly crush on the $/GW scale. But, of course, you probably think (unlike most experts in this field) there is no need to move into a new energy future, so we shouldn’t help wind and solar to become cheaper on the electric bill (as well as in total) — we should stay reliant on power sources which cause us more harm in total, were spoiled with subsidies (and continue to get considerable, stable, secure subsidies themselves). Is that really good logic?

    I’m not at all concerned about my article affecting your investments. There are plenty of people who get it when they see the facts, and there will always be some who don’t.

    On the last rant of yours, I’m sorry the results here threaten you so much. I have looked at a ton of data, not so narrow-mindedly as you, I would contend. I am well aware of the LOE data you have linked to, I am well aware of the propaganda put out by each energy industry, & I am well aware of the difference in subsidies and the fact that cleantech is getting the shaft.

    Yes, this is inconvenient news to people who don’t like wind and solar (who prefer nuclear or fossil fuels), but that does not, in the least, make it all the things you are saying it is.

    Anti-climate change, pro coal, pro oil people are not sold by facts, for the most part. If you think so, you’ve got a lot to learn in this space. But a lot of “on the line” people are confused by the propaganda put out by that machine. This is meant for them.

    Tons of people have found it useful already. Why? Because it gives a more comprehensive look at the subsidy situation. One that pro-coal and pro-nuclear people are terrified of.

    • Ray Mimms

      We have 4 investments in solar, 6 investments in wind, 4 investments in storage, and 0 investments in nuclear.  There is no propaganda, from me or from the DOE.  You are simply wrong.  The world is driven by economics, not fox news.  Purchasing decisions are made based on price; nobody cares what the bloggers are saying.  And if you’re writing off DOE’s unsubsidized LCOE numbers as “propaganda” then you’re drinking someone’s kool aid and I don’t know what to do for you.

      Seems you’re exhibiting what’s known as cognitive dissonance.  There are intelligent people who don’t have the same views as yourself, so you write them off as “threatened” or “terrified” of your “truth.”  It’s an immature stance to take.  I tried by best, hopefully something here will make you step back and realize that what you’ve said here is wrong and ultimately hurts the cleantech movement.  I must admit I’m not hopeful.  Fortunately cleantech will progress regardless.  Wind will continue to grow steadily and over the next few years solar installations will skyrocket.  All will be well with the world, despite all the bad casual analysis…

      • Anonymous

        Ray, i have to say, this one is quite hilarious :D

        You still have completely missed the point of this post, as well as my responses to your comments (perhaps cognitive dissonance?) and if you think i don’t realize that the world is driven to a great degree by economics (not full-picture economics, in particular), you have missed much more than that.

        I’m well aware people are not accustomed to looking at things from a more holistic perspective. Running into “intelligent” people who don’t want to do could be for many reasons, perhaps i was projecting as to what yours were.

        good luck with your efforts

        try to convince me that we don’t pay for the externalities and subsidies above, though, and yes, you won’t make much progress. i don’t see how you can miss the importance of those costs (unless you’re looking at it strictly from an investment perspective, which might be the case since you keep mentioning your investments). i’m concerned about making clear that there are costs beyond what you see in your electric bill and beyond what you hear about from Republican Congress people, because it is lack of knowledge on these points that confuses a lot of people and makes them think solar and wind are not ready yet.

        • Independent Thinker

          That would be like trying to convince you to think objectively.

      • Anonymous

        Comparing
        total subsidy amounts when we use SIGNIFICANTLY (20x) more fossil fuel
        generation than wind or any other renewables is ludicrous.  Adding in
        the health cost for coal from some Harvard survey: ludicrous.  Adding
        development cost of nuclear weapons and amortizing to get an average
        “per year” for nuclear: ludicrous.  You have a hell of a lot to learn
        about the space. Source: Clean Technica (http://s.tt/12Hj7)Comparing
        total subsidy amounts when we use SIGNIFICANTLY (20x) more fossil fuel
        generation than wind or any other renewables is ludicrous.  Adding in
        the health cost for coal from some Harvard survey: ludicrous.  Adding
        development cost of nuclear weapons and amortizing to get an average
        “per year” for nuclear: ludicrous.  You have a hell of a lot to learn
        about the space. Source: Clean Technica (http://s.tt/12Hj7)Comparing
        total subsidy amounts when we use SIGNIFICANTLY (20x) more fossil fuel
        generation than wind or any other renewables is ludicrous.  Adding in
        the health cost for coal from some Harvard survey: ludicrous.  Adding
        development cost of nuclear weapons and amortizing to get an average
        “per year” for nuclear: ludicrous.  You have a hell of a lot to learn
        about the space. Source: Clean Technica (http://s.tt/12Hj7)Comparing
        total subsidy amounts when we use SIGNIFICANTLY (20x) more fossil fuel
        generation than wind or any other renewables is ludicrous.  Adding in
        the health cost for coal from some Harvard survey: ludicrous.  Adding
        development cost of nuclear weapons and amortizing to get an average
        “per year” for nuclear: ludicrous.  You have a hell of a lot to learn
        about the space. Source: Clean Technica (http://s.tt/12Hj7)
        Comparing
        total subsidy amounts when we use SIGNIFICANTLY (20x) more fossil fuel
        generation than wind or any other renewables is ludicrous.  Adding in
        the health cost for coal from some Harvard survey: ludicrous.  Adding
        development cost of nuclear weapons and amortizing to get an average
        “per year” for nuclear: ludicrous.  You have a hell of a lot to learn
        about the space. Source: Clean Technica (http://s.tt/12Hj7)

  • Anonymous

    Copying over a few paragraphs about the history of energy subsidies from a piece on New Energy News…”Just like oil and coal. Those energy sources came along at
    times in history when they were vital to economic dominance and where
    they thrived it was due to enormous support. Supportive policy
    did not mean the same thing in 18th century England and the 19th century
    U.S. as it does now. In both places, the government got the railroad
    crucial to coal’s transport built and let the coal bosses take care of
    the rest. The result: Black rocks fueled the industrial revolution.In
    the wake of World War II, the U.S. oil industry – which had fueled the
    Allied victory – realized the future of oil production was in the Middle
    East. But the industry also realized it couldn’t produce and deliver
    cheap oil while both paying royalties there and taxes here. It’s
    lobbyists went to work and soon Congress gave the industry a tax break
    so gratuitous it was nicknamed “the golden gimmick.” The result: Oil
    mostly replaced coal as the heating fuel of choice by the 1970s and the
    nation got lots of kicks on Route 66.Nothing has changed except that the world now needs a new kind of energy”http://www.newenergynews.blogspot.com/

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  • Jeremyp01
    • Ray Mimms

      Ha, I see you have no problem moderating out my response to your comment above, but when I write a dummy “Fantastic!” you go ahead and allow it.  You’re a sad, sad little man.  Intellectual honesty went out the window ages ago for you, huh?

  • Anonymous

    Besides the PTC/ITC/cash grant for wind, it also benefits from 5-year double-declining balance accelerated depreciation. Plus, renewable portfolio standards create an artificially driven market for it and for the extra sale of “renewable energy credits”.

    • Anonymous

      It is my understanding that wind farm operators have a choice between three subsidy options – production tax credits (PTC – sometimes called feed in tariffs (FiT)), accelerated depreciation, or a cash grant equal to the tax return that would be realized with depreciation.

      Wind does not “also benefit”, wind chooses which of the three subsidies best works in each particular situation.

      • Anonymous

        No, the DD200% depreciation is an additional benefit, as is the forced market for wind and the extra sale of green tags.

        The three choices besides those are among the PTC, the ITC (investment tax credit), or the cash grant.

        The PTC is not a feed-in tariff. The FIT would be yet another benefit, setting an inflated price for wind energy.

        • Anonymous

          Would you please post a link backing that claim?  All I’ve found on line comes from anti-wind, pro-fossil fuel sites.

          Yes, on the FiT.  I realized that I had made a mistake soon after posting that but had not gotten back to correcting my error. 

          The PTC is a tax cut (right wingers love tax cuts, don’t they?), a FiT would be a direct subsidy.  With a FiT the operation would not need to be profitable, but would receive payment for each unit of power produced.  With the PTC option the operation is hit with a lesser tax burden.

          It might be worth pointing out that accelerated depreciation means that the operation will pay less taxes in the early years of operation but higher taxes later on.  It’s an aid to projects with high start up/capital costs as it leaves them more of their profits in first years to use against start costs but they give up tax benefits further down the road.

          Accelerated depreciation has little effect on Joe Taxpayer.  The tax money does not arrive quite so soon, but making this sort of support available means more businesses and more jobs.  And both mean more tax income over time.

          • Anonymous

            Third try: dsireusa org – click “View federal incentives”

            And note: the accelerated depreciation is for 200% the value of the plant.

          • Anonymous

            Third try: dsireusa org – click “View federal incentives”

            And note: the accelerated depreciation is for 200% the value of the plant.

  • gcowan

    Fossil fuels are not subsidized.

    I’m on a White House mailing list, and recently one of themailings had something about oil subsidies in its title.This smacks of wanting to increase the government’s nettake, what with the citizenry again showing theirwillingness to give.We have subsidized housing for the poor in Toronto,except they have to be fast and/or shrewd to get it.There is a 70,000-member waiting list, and if I heardthe radio correctly, that’s a *20-year* waiting list.I don’t see how it could be otherwise, for anygenuinely subsidized commodity*.I suppose almost everyone whose income largelycomes from the public exchequer is unable to understandthat gasoline users subsidize him or her, and notthe other way around.As to why you can go to a gas station with $1000and a pickup truck full of gas cans, just about any timeyou take the notion, and get them all filled, withoutfilling in any forms or knowing anyone — this must bea permanent mystery to them. A wholly *uninteresting*deep black mystery.I wonder how we get the minority of those people who canthink and talk sense on this matter to do so more often?Your president seems to me to talk sense on other matters,but he and Dr. James Hansen both speak of fossil fuelsubsidies.

  • Ray Mimms

    This article is so horribly wrong it’s borderline irresponsible, and I work in cleantech investing!  Comparing total subsidy amounts when we use SIGNIFICANTLY (20x) more fossil fuel generation than wind or any other renewables is ludicrous.  Adding in the health cost for coal from some Harvard survey: ludicrous.  Adding development cost of nuclear weapons and amortizing to get an average “per year” for nuclear: ludicrous.  You have a hell of a lot to learn about the space.

    • Anonymous

      Ray, taking full cost (or closer to full cost) into account is a horrible idea? For whom?

      On health cost externalities, externalities are subsidies, whether certain people in society recognize that or not. I think that is a highly unrecognized fact and one I am interested in bringing more attention to.

      On nuclear weapons, as far as I remember, I say nothing about that in this article.
      How often do you hear the BS about wind and solar relying on subsidies? And it is framed as if fossil fuels never have and don’t. Yes, looking at subsidies compared to output would be really useful! It’s a good follow-up idea. But not just looking at them now, also looking at them at the time when each energy source was starting up. I’d love to compare the subsidies of nuclear’s first 40GW to Wind’s first 40GW — with general knowledge on this matter (but not the numbers completely crunched), I know nuclear doesn’t compare to wind.I don’t know what kind of cleantech investing you’re doing, but it seems clear that the information provided above steps on your toes in some way.It is not always about learning how things are done, but also about changing/improving the way they are done.We don’t properly account for important costs.
      We don’t fairly compare subsidies.
      We don’t give wind energy the security and stability in subsidies that other energy sources had (and have).
      And if we want to just talk about throwing money away on energy subsidies, the Total Dollar Amount IS Important, not just the $/electricity produced.But to reiterate, if one wants to compare that figure, it’s most fair to compare historically, something this post does a bit intrinsically but doesn’t spell out or provide exact figures on..Feel free to crunch the numbers on subsidies per 1st 40GW of each of these sources for me and I’ll stick the info in above or write a new post on that.

    • Anonymous

      Here’s some fresh stuff for you Ray, hot off the press…

      ” Birth defects are significantly more common in areas of mountaintop
      coal mining and are on the rise as the practice becomes more common,
      according to a study by researchers at Washington State University and
      West Virginia University.

      The researchers, led by Melissa Ahern, health economist and associate
      professor in WSU’s College of Pharmacy, found 235 birth defects per
      10,000 births where mountaintop mining is most common in four central
      Appalachian states. That’s nearly twice the rate of 144 defects per
      10,000 in non-mining areas.”

      http://www.sciencedaily.com/releases/2011/06/110623090001.htm

      So, it’s not only burning coal and black lung disease that’s adding to the cost of health care, it’s mountain top removal as well.  We’ll pay for a lot of that care though our taxes and more via our higher health insurance premiums.

      And you think we should just ignore those “ludicrous” hidden cost subsidies.

      Got it…..

  • Mr Ghwardron

    And I must say, I had no idea that wind power was so cheap! If we can somehow manage to make wind reliable we’d be up to our ears in cheap, clean energy. I’m closely following the R&D regarding utility-scale batteries for storing energy. If we can get those to adequate levels of performance and cost, we would eliminate the primary concern associated with wind power, that is, reliability.

    • Anonymous

      Yeah, I am trying to learn more and more about the storage options (or other options that help with the same issue)… share whatever great info you run across on those matters.

      & if you want, would even be up for drafting you to working on a piece or more on such topics. Let me know if it interests you.. ?

  • Mr Ghwardron

    Awesome article! I’ll slam people in the face with it when I discuss energy subsidies next time :)

    Also, I checked out your article about wind power! Holy ****, it’s wonderful! Please keep adding to it. It’s going to be a great resource for a lot of people!

    • Anonymous

      Thanks a ton! That is THE goal of that page (and this article), so more than happy to hear that you think it is useful for that :D

      Going to try to organize the Wind Power page better to make it easier to navigate soon. Feel free to drop any comments below it or send me an email if you have any input or want to be involved!

  • Anonymous

    Great graphs. Fossil fuels/nuclear obviously produce more energy than wind, but the numbers at the bottom seem to indicate that their subsidies exceed wind even on a per kWh basis. And if we stopped subsidizing any type of energy, the higher prices would push us towards greater efficiency as well.

    • Anonymous

      thanks. was afraid the key points would get buried in all that info, so tried to highlight the end figures :D

      plus, as you point out, total subsidies have to be compared to total output in some way.

  • Hschille

    Can’t really see that big oil is subsidiesed here in Norway. They pay 78% company tax on all income from natural resources. This is giving the gouverment enourmus income. And stil some to the oil companies too.
    So don’t really agree with this. But that doesn’t mean we can’t subsidies the renewable. Which I think we should… Big time.

    • Anonymous

      hmm, interesting. i think Norway is a special case :D it is certainly different that the US! :D

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