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

Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!

Wind Power

The Union of Concerned Scientists has a great summary on production tax credits, wind’s most significant subsidy. I’m going to excerpt a significant portion of that below:

The American Recovery and Reinvestment Act of 2009 (H.R. 1), signed into law by President Obama on February 17, 2009, extended the production tax credits (PTC) and investment tax credits (ITC), which have been critical to the growth of the renewable energy sector, and added a new incentive, Treasury grants taken in lieu of tax credits, designed to promote the growth of renewables despite the economic downturn….

Companies that generate wind, solar, geothermal, and “closed-loop” bioenergy (using dedicated energy crops) are eligible for the PTC which provides a 2.1-cent per kilowatt-hour (kWh) benefit for the first ten years of a renewable energy facility’s operation….

The PTC for wind, which as the largest producer of renewable energy has the greatest impact on the budget, was extended an additional two years, until the end of 2012….

This measure is designed to promote the development of renewable energy in instances of economic uncertainty where a PTC is not as enticing to developers as an ITC.

A third incentive established by the bill is a grant system administered by the Treasury Department. In lieu of tax credits, wind, biomass, geothermal, and solar projects can receive a grant of up to 30 percent of the basis of the property’s value…. The grant system was developed to maintain the growth of the renewable energy sector despite the economic downturn. Because many renewable developers weren’t as profitable, they didn’t have the income taxes to pay, and so the tax credits weren’t valuable to them. Now, with the ability to receive grants in lieu of tax credits, renewable energy developers should be able to continue their growth….

From 1999 until 2004, the PTC had expired on three separate occasions. Originally enacted as part of the Energy Policy Act of 1992, the PTC—then targeted to support just wind and certain bioenergy resources—was first allowed to sunset on June 30, 1999. In December of 1999, again due to the efforts of UCS and other organizations, the credit was extended until December 31, 2001. The PTC expired at the end of 2001, and it was not until March 2002 that the credit was extended for another two years. Congress allowed the PTC to expire for the third time at the end of 2003. From late 2003 through most of 2004 attempts to extend and expand the PTC were held hostage to the fossil-fuel dominated comprehensive energy bill that ultimately failed to pass during the 108th Congress. In early October 2004, a one-year extension (retroactive back to January 1, 2004) of the PTC was included in a larger package of ‘high priority’ tax incentives for businesses signed by President George Bush. A second bill—extending the PTC through 2005 and expanding the list of eligible renewable energy technologies—was enacted just a few weeks later.

As you can see, wind’s subsidies are extremely short-term and insecure. They have clear purposes that go far beyond benefiting the wind industry, but they are not as stable and secure as oil, coal, and nuclear subsidies.

Wind gets the shaft when it comes to stable subsidies (and solar, too). These truly clean energy sources are like an energy version of Cinderella in my mind — they are tasked with cleaning everything up after the reckless partying is over but only get the necessities of life when a temperamental, unfriendly authority figure is in the mood to dish something several times less significant than their big sisters get to them. (Yes, I’ve seen Cinderella a few times, have a couple sisters — hopefully you get the analogy.)

Basically, if anyone should be pissed about wind subsidies, it’s the wind industry, not the fossil fuel or nuclear industry, which gets so much more.

With wind getting it’s choice between a 2.2 cent PTC or a 30% first year tax credit or a cash grant, the production cost of wind energy is approximately 6.7 cents (4.5 cents plus 2.2 cents) minus whatever profit the owners put in their pockets. For comparison, coal wholesales for 5 cents but has approximately 18 cents in hidden costs and nuclear gets about 6 cents per kWh in subsidies, bringing its unsubsidized price up to about 10-12 cents per kWh.

So, without subsidies, prices would be something like this:

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

<<— Page 1: Intro

<<— Page 2: More on What Subsidies Are

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

Images via oneclimate


Have a tip for CleanTechnica? Want to advertise? Want to suggest a guest for our CleanTech Talk podcast? Contact us here.

Latest CleanTechnica TV Video


Advertisement
 
CleanTechnica uses affiliate links. See our policy here.

Zachary Shahan

Zach is tryin' to help society help itself one word at a time. He spends most of his time here on CleanTechnica as its director, chief editor, and CEO. Zach is recognized globally as an electric vehicle, solar energy, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, Canada, and Curaçao. Zach has long-term investments in Tesla [TSLA], NIO [NIO], Xpeng [XPEV], Ford [F], ChargePoint [CHPT], Amazon [AMZN], Piedmont Lithium [PLL], Lithium Americas [LAC], Albemarle Corporation [ALB], Nouveau Monde Graphite [NMGRF], Talon Metals [TLOFF], Arclight Clean Transition Corp [ACTC], and Starbucks [SBUX]. But he does not offer (explicitly or implicitly) investment advice of any sort.

Zachary Shahan has 7317 posts and counting. See all posts by Zachary Shahan