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Published on February 18th, 2012 | by Andrew

37

Deja Vu All Over Again: Congressional Republicans Intent on Nixing Wind, Renewable Energy Growth

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February 18th, 2012 by
 
Congressional Republicans this past week scuttled an effort to extend the production tax credit (PTC) for wind energy as part of a bill that renews Pres. Obama’s payroll tax cut and unemployment benefits extension.

Both Democrats and Republicans want economic growth and development—just ask any one or the other any time. It’s abundantly clear that they have irreconcilable differences as to just what kind of growth is good growth, as well as how best to go about fostering it in the current economic and social environment, however.

The wind energy PTC has been a boon to a US market and industry going through youthful growing pains. It’s helped attract billions of dollars of investment; helped create many thousands of good jobs in an emerging industry that’s going to prove vital in the decades ahead; yielded substantial avoidance of greenhouse gas emissions, air, water and land pollution; and improved health conditions.

Clearly, Republicans won’t stand for any such things. ‘Socialism!,’ they cry. ‘Unfair subsidies!’ ‘It’s the government deficit and huge debt that matters!’ Such hyperbole and rhetoric falls flat on its can when you consider that the same “public” representatives refuse to vote similarly and eliminate subsidies many times the size and scope of the wind and renewable energy PTC.

Adding insult to injury, those longstanding federal subsidies continue to benefit one of the largest, most profitable industries of the industrial, or any other, age—oil and gas. Why such outrageous hypocrisy? Why do voters buy it?

In politics, as in movie-land murder mysteries: Cherchez la money—corporate PAC, now superPAC, and lobbying money in this case, as well as all the other perks enjoyed by our many bought-and-paid-for Congressional representatives—junkets, “business” trips, paid-for conference vacations, discrete, timely deposits to bank accounts in offshore tax havens… Who knows? The sky’s the limit, ya know, in our circus merry-go-round of a political system because big corporate donors are going to get paid back many times over.

A Brief History of the Energy Production Tax Credit

The PTC for wind and renewable energy, or power, production is actually a relatively recent creation. Established by the Energy Policy Act of 1992, it’s intended “to stimulate use of renewable technologies for power production by providing a production-based credit for the first ten years of project operations beginning at 1.5 cents per kilowatt-hour (kWh),” adjusted upwards for inflation in future years, explains Ryan Wiser, Mark Bolinger and Galen Barbose of the Ernest Orlando Lawrence Berkeley National Laboratory in a 2007 paper entitled, “Using the Federal Production Tax Credit to Build a Durable Market for Wind Power in the United States.”

Only wind and “closed-loop” biomass were originally eligible for the PTC. Companies in the emerging solar and geothermal industries were eligible to receive an investment tax credit (ITC).

By 2007, the inflation-adjusted value of the PTC was 2 cents per kWh ($20 per megawatt-hour (MWh)), and it had been expanded to include geothermal. Hydro power, landfill gas, and municipal solid-waste-to-energy systems were made eligible for a PTC at half that rate, while non-renewable energy sources, including refined coal, Indian coal, and nuclear power are also eligible for PTCs. Solar energy was eligible for the PTC briefly, from 2004 through 2005.

The American Wind Energy Association (AWEA) summarizes the two principal federal subsidies supporting the US wind energy industry. “Under present law, the PTC provides an income tax credit of 2.2 cents/kilowatt-hour for the production of electricity from utility-scale wind turbines. The PTC is set to expire on December 31, 2012.

“Additionally, through Section 1603 of the American Recovery and Reinvestment Act of 2009, wind project developers can choose to receive a 30% investment tax credit (ITC) in place of the PTC. For projects placed in service before 2013, at which construction begins before the end of 2011, developers can elect to receive an equivalent cash payment from the Department of Treasury for the value of the 30% ITC.”

The Dramatic Economic Impact of Wind Energy PTC Extensions and Lapses

At the time the Berkeley Lab paper was written, wind power met less than 1% of US electricity needs, but the stimulative effect of the PTC was clear and positive. The effect on other renewable energy industries was not yet substantial for other renewable energy sources, in part because they had been eligible for the PTC for only a short period of time, the authors noted.

As the paper’s authors wrote,”The PTC reduces the price of wind-generated electricity by roughly 2¢/kWh on a 20-year levelized basis, thereby making wind more attractive to electric utilities and other investors. In fact, with the PTC, wind power is now economically attractive in some regions of the country relative to more-conventional electricity sources.”

Creating Boom-Bust Cycles

Even at that time, it was clear that alternating lapses and renewals of the wind energy PTC, typically over 1-2 year periods, has created cycles of boom and bust in the US wind energy industry, however.

According to the authors, “Partly as a result of the PTC, the U.S. has led the world in newly installed wind power capacity for the last two years. Nearly $4 billion was invested in new U.S. wind projects in 2006 alone and, since the PTC began in 1994, U.S. wind plant additions represent an aggregate investment of roughly $13 billion.”

In contrast, there were sharp declines in wind energy investment in 200, 2002 and 2004. “In each of these cases, the PTC lapsed for some period of time before being subsequently extended, substantially dampening development activity. Though some wind development will surely occur even without the federal PTC (e.g., due to state policy efforts and other factors), this historical experience suggests that the PTC, or some alternative policy, may be crucial if significant near-term growth of the wind market is desired,” the authors stated.

Peering out into the future, the DOE’s National Renewable Energy Lab in 2007 used a model specifically designed to forecast wind deployment, the authors noted. The results: Extending the PTC through 2020 “could stimulate enough wind power to serve as much as 17% of the nation’s electricity supply by 2030.”

Ongoing Congressional battles over renewal of the wind energy PTC have continued since 2007, and so have the boom-bust cycles. Here’s a chart from the American Wind Energy Association (AWEA) clearly illustrating the boom-bust cycle in the US wind industry.

Repercussions and Future Course of Action

The instability of the federal wind energy PTC had severe, negative repercussions for the US wind energy market and industry back in 2007, repercussions that hold true today as Congressional Republicans continue to thwart efforts to renew the wind energy PTC. Among them, the Berkeley Lab paper’s authors listed:

  • Slowed Wind Development
  • Higher Wind Supply Costs
  • Greater Reliance on Foreign Manufacturing
  • Difficulty in Rationally Planning Transmission Expansion
  • Reduced Private R&D Expenditure

The AWEA recently released a Navigant Consulting research report examining the wide-ranging, potential impacts renewing the wind energy PTC or allowing it to expire would have.

According to numerous studies and for energy policy experts, it’s clear that the wind energy PTC has had large and wide-ranging benefits for the US economy. Increased wind energy investment and project development since 2007 has been a sorely needed bright spot for the US in terms of investment, economic growth, and green job creation, while at the same time reducing our dependence on imported petroleum and significantly increasing the amount of clean, renewable energy produced and consumed domestically. It’s also yielded substantial tax revenues to local, state, and the federal government.

Passing a long-term extension of the wind and renewable energy PTC would enable the US to build on that trend. Allowing it to expire threatens all of the above. This begs the question,” Why are Congressional representatives voting against it?”

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About the Author

I've been reporting and writing on a wide range of topics at the nexus of economics, technology, ecology/environment and society for some five years now. Whether in Asia-Pacific, Europe, the Americas, Africa or the Middle East, issues related to these broad topical areas pose tremendous opportunities, as well as challenges, and define the quality of our lives, as well as our relationship to the natural environment.



  • http://www.facebook.com/rthoeni Rene Thoeni

    It would be of great value to be informed on how much the KW cost are in the US compared to other countries. That is turn key cost and also cost to maintain after manufacturer warranty has run off.
    It seems with more information at hand getting approvals and financial assistance would be easier to come bye.

    • http://www.facebook.com/rthoeni Rene Thoeni

      With other words is the money invested in windpower invested wisely in the US? Or are bloated union contracts and other give away’s choking the life blood out of the industry?

      • http://cleantechnica.com/ Zachary Shahan

        It’s one of the cheapest forms of new electricity, the cheapest in many places.

        Some large investment companies and other companies (like Google) are investing big money in it because it is such a good investment.

  • Eric M

    Each Vestas V- 100 turbine requires 200 gallons of oil to operate and that needs to be changed every 6 months assuming that all the turbines installed between 2007 and the end of 2011 were the equivalent of the v-100 that would be about 20,000 turbines using AWEA stats. Those turbines alone will use 8,000,000 gallons of oil a year.
    That means with the assumption that 70% of our oil comes from foriegn sources then 5600000 gallons of foriegn oil is needed each year to operate every wind turbine put on line since 2007.

    So now you know that wind energy is dependent on foriegn oil to produce a unreliable and trivial amount of electricity.

    • Bob_Wallace

      That oil is cleaned and reused.

      Lubrication oil does not get “used up”, just dirty.

      3% of all US electricity came from wind last year. That’s hardly “trivial”.
      Any more disinformation you’d care to share?

      • Eric M

        Maybe I should have chosen my words more carfully what I really meant instead of “trivial’ was
        fiddling, foolish, frivolous, incidental, inconsequential, inconsiderable, insignificant, little, Mickey Mouse, minor, minute, negligible, nugatory, slight, small, small-fry, trifling, unimportant, I believe that hits the nail on the head about wind energy

        • Bob_Wallace

          Eric, you need to return to your fossil fuel overlords and report your failure.

          You’ve given us more than an ample share of teh stupid….

  • Eric M

    The chart needs to be updated according to the AWEA even with the PTC in place through the end of 2012 there was a significant drop in wind generators being constructed in the US well below the levels of 2007 in 2010 and 2011 so much for its looming PTC deadline causing the industry to shut down, its been on the way downhill for over 2 years.

    • Bob_Wallace

      The chart is wind Installed.

      It is not turbines manufactured.

      • Eric M

        And the chart I quoted was for wind installed so where did I say manufactured. I believe you have to construct them to install them.

        • Bob_Wallace

          Where?

          Here.

          “there was a significant drop in wind generators being constructed in the US”

          Constructed = manufactured for most English speakers.

          We do import turbines from other countries. Not every turbine installed in the US is made here. And it’s likely that imports will take over more of the market.

          http://www.bloomberg.com/news/2011-10-13/china-targets-ge-s-wind-turbines-with-15-5-billion-war-chest.html

        • Eric M

          Oops I guess again I should have chosen my words more careful “construct” means to
          build, make, form, create, design, raise, establish, set up, fashion, shape, engineer, frame, manufacture, put up, assemble, put together, erect, fabricate
          I believe that we were both right but there is no turbine that is completely, built, raised, setup, put up, assembled, put together, or erected in the manfacturing facility.
          I believe that could also mean to construct but anything to deflect from the fact that even with the PTC the installed capacity in the US has went down significantly since 2009.

        • Bob_Wallace

          Due to increased worldwide installation of wind turbines there was a shortage of turbines following 2009 which caused an increase in price and a drop in installation. The Bush Recession didn’t help either.

          “The wind sector in America bounced back in 2011 after a tough 2010, installing more than 6,800 megawatts of wind energy.

          “We have installed more than a third of all new American electric generation in recent years and are well on our way to providing 20% of America’s electricity by 2030 as projected by the Bush Administration. Our 2011 installations alone provide enough electricity to power almost two million American homes,” says Denise Bode, CEO
          of the American Wind Energy Association.”

          Source: Clean Technica (http://s.tt/15BcM)

        • Eric M

          AWEA is always looking for excuses but again when you sell a product that consistently runs at less than 30% of its nameplate capacity then you have to blame someone for your bad product.
          Remember its only 2,000,000 homes if you use nameplate capacity but when they only run with a 30% efficiency thats only 60000 homes on a per year average( key word average).

        • Bob_Wallace

          Eric, you just aren’t able to keep on shoveling the horse poop, can you?

          No generation technology runs at 100% nameplate/rated capacity. And percentage of nameplate is irrelevant. The relevant statistic is cost per kWh.

          Furthermore new technology wind produces at higher than 30% nameplate.

          Now here’s the AWEA claim…

          ” Our 2011 installations alone provide enough electricity to power almost two million American homes,”

          They state that 2011 wind will generate enough power for ~ 2 million homes. Downsizing that claim is your “magic” at work.

          You’ll have to excuse me if I don’t whack the next mole you shove up from your burrow. I need to take my chain saw and give my forest some tough love….

        • Eric M

          Well Bob I have had alot of fun here but I leave you with this quote from the wind developers to the MPSC to get their ppa changed in my county in January 2012. ““The developer has concluded it is unable to develop its project in Riga, Palmyra and Ogden townships due to significant opposition to wind generation by the residents of Lenawee County”.They were here almost 4 years and used all of the same talking points that you quote from the AWEA and they lost to “significant opposition” of the almost 100,000 people in Lenawee county.
          Thank you for the vocal majority for their voting out these inefficient tax wasting wind turbines.
          .

        • Bob_Wallace

          Oh, boy. Low information right-wingers shoot themselves in the wallet.

          Even the good ol’ boys in Texas know that if you put a bunch of wind on your grid then your electricity costs go down.

          And the conservative Republican governors of Wyoming and Kansas know that wind farms bring jobs and tax revenue to their states. That leasing out land for turbines creates a very nice income for farmers and ranchers.

          But the wingers of Leanwee County, Michigan bought the bogus pushed by people like Eric. And they voted to keep their electricity costs high, local tax revenues low, and their citizens standing in the unemployment line….

  • Eric M

    Why are Congressional representatives voting against it? Because it is costly and inefficient and needs coal, gas and nuclear to back it up.
    By the way the biggest supporters of wind power is the big coal, oil ,gas, and nuclear companies, thats because, according to a Duke energy executive, that the return on their investment in wind, with the subsidies, give them an annual return between 17 – 22 %, so these subsidies for wind makes the the coal, oil, gas, and nuclear companys more profitable on the backs of the American taxpayer.

    • http://bobhiggins.wordpress.com/ Bob Higgins

      “…according to a Duke Energy executive…” Now there’s an unimpeachable source.

    • Akbweb2

      Coal, oil and gas have been so profitable because they’ve received federal subsidies much greater over decades….

    • http://twitter.com/RepubDirtyTrick Tara[dacktyl] Devlin

      Gee! One might almost accuse you of sounding like a Big Oil insider! But, how can that be? Big Oil would NEVER pay people to scour the web, posting positive comments about their filthy, archaic product… right? Except… THEY DO. Rest assured, If the Internet were around in the 80s, Big Tobacco would have its flying monkeys all over the web praising the health benefits of Carbon Monoxide. But let’s be clear. Republicans killed this subsidy because their masters have a vested interest in keeping America hooked on oil. Republicans are the puppets of Big Oil – NOT the People. The GOP would vote to hurl Earth towards the Sun if it meant lining their greed-centered, filthy pockets. These archaic dinosaurs are ALWAYS on the WRONG side of history – BECAUSE THEY ARE PAID TO BE… and they will do anything to try and hold on to the cat-bird seat of power for as long as they possibly can to rape, plunder and steal as much as they possibly can. Howz come we never hear of the Big Oil subsidy being voted away? It isn’t because Big Oil is the energy of the future, that’s for sure! One day, Big Oil will be disdained for the rapacious monster it is and vilified for the damage it has done “ON THE BACKS OF THE AMERICAN TAXPAYER.”

      • http://cleantechnica.com/ Zachary Shahan

        Well said. :D

  • Bill_Woods

    “the PTC was 2 cents per kWh ($0.20 cents per megawatt-hour (MWh))”

    should be $20 per MW-h. (Or 2,000 cents.)

    • Akbweb2

      Thx.

  • http://bobhiggins.wordpress.com/ Bob Higgins

    “Why are Congressional representatives voting against it?”

    Because congress is entirely coin operated and oil, gas, coal and nuclear just keep feeding the coin slot.

    • lukealization

      Very, very clever and elegant analogy.

  • http://profile.yahoo.com/YVJU467YQOYVKQRIPSIZNEMPXM TD

    I fully support wind energy, but I’m not sure I buy that wind energy decreases our dependence on foreign oil. This seems like blind use of a buzz word that cannot be backed up. Wind energy creates electricity, which, in our country, is mostly created using coal, nat gas, hydro, and nuclear. Can you post your source for your comment on it reducing our dependence on foreign oil?

    • Bob_Wallace

      How much oil must wind replace to meet your criterion? Did the first Model T decrease our use of horses?

      If you’re trying to argue that wind has not replaced a significant amount of foreign oil at this point in time then you probably have a valid point. But like arguing that the first model T didn’t retire a lot of horses you would be ignoring a transition from one technology to another.

      There are a few thousand EVs in the US today. They are not burning any oil, foreign or domestic. A portion of their power is coming from wind.

      • http://profile.yahoo.com/YVJU467YQOYVKQRIPSIZNEMPXM TD

        Bob, I think you misunderstood my argument, plus, your defense of EVs to me is like preaching to the choir. I was stating that wind produces electricity, which is not directly an oil substitute. In your argument, it would be EVs that reduce our dependence on foreign oil, not wind power. Using EVs would move our consumption from oil to electricity. In your scenario, wind power indirectly replaces oil through the supplying of electricity to electric vehicles, which is a valid argument. But currently, 99.x% of wind energy offsets other types of energy (mostly coal and natural gas) and not oil, because oil is not used to generate electricity. So our real argument as wind supporters is its replacement of dirty coal and less dirty natural gas, not necessarily the replacement of oil and the reduction of our dependence on foreign oil. Saying it replaces oil today isn’t necessarily true, nevertheless, saying is replaces coal is just as good for America and its environment, but is less sexy than saying it reduces dependence on foreign oil.

        • Bob_Wallace

          (Yes, I’m chasing the ball into the weeds, however I could use some exercise….)

          Nissan has sold 1,000 Leaf EVs in the US.

          Those Leafs are being used for 12,000,000 miles of electric-driving rather than oil-driving. Based on 25MPG gasmobiles, that’s 480,000 gallons of gas not burned.

          If 70% of that avoided gasoline would have come from foreign sources then 336,000 gallons of foreign-oil based gasoline were not burned. The actual amount of oil would be higher as there is a certain amount of waste in converting oil to gasoline, a good hunk of each gallon of oil is burned during refining.

          Of the electricity used to power those Leafs about 3% on the US grid comes from wind. Wind offset at least 10,800 gallons of imported oil.

          Yes, that is a small amount. But those numbers are almost certain to rise. We now know how to replace imported oil with wind power….

      • Dcard88

        I’m chasing the ball into the weeds”

        LOL, and I wanted to add ‘golf’ ball, but I guess that would detract from the flow.

    • Akbweb2

      Agree Bob W’s reply below, but have to concede yours on balance…Have updated the article accordingly…

    • lukealization

      It’s a two step transition. Build the electricity infrastructure and the solar/wind projects – and then switch America’s vehicle fleet over to EV. It’s no small task for sure, and it will take many decades. But we landed on the moon right? (Oh wait, that was 40 years ago…)

      • Bob_Wallace

        Not a two step transition, but a ‘jump with both feet’.

        We’ve got more than enough infrastructure to switch a very large percentage of our personal vehicles to electricity right now.

        The grid could charge 85% of all our personals were they changed to EVs overnight. Obviously we won’t change our personals that rapidly.

        Just rough (pre-Great Inflation) numbers – the US fleet was about 256 million cars and 16 million new cars were sold in 2007. At that rate it would take 16 years to turn over the fleet.

        Obviously not all personals would be EVs and PHEVs so we can easily install renewable generation fast enough to keep ahead of the vehicle transition.

        Wind is the cheapest and probably the best way to charge our EVs. Onshore wind tends to blow hardest at night when demand is lowest. Plug in lots of EVs at night and a market is created for wind farms. A better market means more profits and more profits attract more investment which allows even more wind farm construction.

        The side benefit is that there will be more wind-electricity during the day which will pull down our electricity prices.

        The other way to charge our EVs is solar. The average driver racks up about 12,000 miles per year. That’s 32.8 miles per day.

        The Nissan Leaf used 0.35(or less) kWh per mile. It would take 12.7kWh to provide that power. (I added in 10% to allow for power lost to battery charging.)

        Almost all of the US gets an average of 4.5 hours of usable Sun per day. (Don’t be quick to bunch your bloomers, think about what the term “average” means.)

        12.7kWh/4.5 hours of Sun means that one would need 2.8 kW of solar panels. At the absurdly high cost of $4/Watt installed one could buy 40+ years of EV “fuel” for $11,200.

        That’s $23 dollars a month. To fuel 100% of ones driving.

        And remember, wind is a lot cheaper.

        • Eric M

          Wind is alot cheaper than solar?
          Yes you are correctm according to the US Energy Information Administration in 2010
          Solar is $775.64 per mw
          Wind is $56.29 per mw
          but there are other sources alot cheaper
          like
          Geothermal is 12.85 per mw
          Nuclear is 3.14 per mw
          Hydro is 0.82 per mw

          Boy compared to those very expensive sources like solar and wind you could fuel 100% of ones driving for almost free.

        • Bob_Wallace

          It’s Sunday morning. Let’s all join in on a rousing singing of “Oh, Thou Fount of Misinformation”….

          Solar, 500kW installation on a large roof in a sunny location is now $0.1659/kWh. Not over $0.75/kWh. Even (non-subsidized) residential rooftop in a cloudy climate is less than the number you present.

          http://www.solarbuzz.com/facts-and-figures/retail-price-environment/solar-electricity-prices

          New nuclear is not $0.03/kWh. It’s at least $0.12/kWh and that number comes from an industry insider who refused to specify which costs were and were not included.

          Based on ‘turnkey’ bids given to Ontario, San Antonio and Turkey in the last few years the price is likely around $0.20/kWh. And that does not include federal subsidies.

          Solar is now as cheap or cheaper than new nuclear and the price of solar is heading lower.

          The price of new nuclear is almost certain to rise as additional safety requirements are put in place following the Fukushimi disaster.

          Those EIA numbers are based on 2009 prices. It’s now 2012. And one cannot use the cost of operating a paid off generation plant with new generation.

        • Eric M

          So Bob then you agree that the author that you so agree with is quoting old outdated material to try and push you much beloved inefficient wind power
          Ill start
          OOOOOOH Thou Fount of Misinformation started with this article because Bob says so.

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