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Published on August 4th, 2012 | by Andrew

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Senate Committee Revives Wind Energy Tax Credit; Nuclear-Fueled Exelon Seeks to Squash It

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August 4th, 2012 by  

The Senate Finance committee late early Thursday (August 2) added a one-year extension of the $12-billion wind energy production tax credit (PTC) into a broad, $205-billion tax credit extension bill, reviving hopes that a sharp contraction in US demand for wind power may be avoided, according to a Reuters report.

US wind energy industry participants, such as Denmark’s Vestas, are cautiously encouraged by the PTC’s revival, but some of the nation’s largest utilities, including Chicago-based Exelon, are working to assure the tax credit extension doesn’t make it through Congress.

 

 

Congress’ “Stop-and-Go” Support for US Wind Power

Faced with the year-end expiration of the PTC, US wind energy projects are being postponed and canceled. Repeated enactment and lapse of the wind energy PTC since it was first passed in 1992 has prompted a series of booms and busts in US wind energy, industry participants and proponents note.

The wind energy PTC allows wind power producers to take a 2.2 cents-a-kilowatt hour credit against their tax bill. When it’s been allowed to expire, US wind power installations and wind turbine orders collapsed, the former falling between 73%-93% and the latter 75% in a single year, according to a American Wind Energy Association (AWEA) study. The CEO of market-leading wind turbine manufacturer Vestas has repeatedly warned that a repeat is in store should the current PTC be allowed to expire.

A detailed Navigant study of the history of the US wind energy PTC for the Union of Concerned Scientists shows that the federal government’s “stop-and-go” policy of enacting the wind energy PTC and then allowing it to expire has wreaked havoc on the industry, the broader economy, and job creation.

With the federal wind energy tax credit in place for six years now, US domestic production of wind turbine components has grown 12-fold at what’s now more than 400 facilities in 43 states. That’s brought highly valued manufacturing jobs back to the US, the AWEA points out.

Enacting a four-year extension of the PTC would keep the US wind energy industry on track to supporting half-a-million jobs by 2030, a statistic projected in a US Dept. of Energy report completed during the G.W. Bush administration, the AWEA has noted.

Should the wind energy PTC be allowed to expire at year-end, 50% of US wind energy industry jobs — some 37,000 — would be lost, including a roughly ⅓ cut in US wind energy manufacturing jobs, according to Navigant’s analysis and projection.

Outlook: Highly Uncertain

The outlook for extension of the federal wind energy PTC is highly uncertain, as wind and renewable energy tax credits and other government incentives sought by the Obama Administration and supporters in Congress have been consistently stymied by opponents. Federal government support for renewable energy has become a “hot button” political issue and dividing line for President Obama and leading Republican candidate Mitt Romney.

Though it’s one of the largest providers of wind power in the US, Chicago-based Exelon is also the largest provider of nuclear power. Sharp declines and fast-growing production of clean, renewable wind power is cutting into its profits, as electricity produced from nuclear energy comes with higher profit margins, the Chicago Tribune reports.

“Wind power provides a fraction of power in the U.S., but once the turbines are running, they depress electric prices because wind as a fuel is free. At certain times, such as the middle of the night, wind power can help drive electricity prices to below zero,” the Chicago Tribune‘s Julie Wernau explains in her article.

She notes that Exelon’s “been a climate change evangelist for 20 years, billing itself as one of the greenest, lowest-pollution-emitting power producers in the country.” Nonetheless, nearly half the company’s profits come from its nuclear power plants, and low-cost wind power, as well as low natural gas prices, which are cutting into its profit margins.

Rising to CEO through Exelon’s nuclear power division, CEO Christopher Crane says that after 20 years, it’s time to let the federal wind energy PTC expire. “The (production tax credit) has been in place since 1992, I believe,” Crane was quoted as saying during an earnings conference call with investors and analysts Wednesday.” And I think that’s enough time to jump-start an industry, 20 years. So, we’ve made it known, even as a wind company, that it should be stopped.”

It didn’t take long for criticism of the Exelon’s CEO statements and Exelon’s lobbying to squash the wind energy PTC to emerge.

“Exelon has been advertising for years how green the company is. They’ve been showcasing wind turbines on their materials. They’ve been proud of their sustainability footprint,” the Chicago Tribune quoted Howard Learner, executive director of the Chicago-based Environmental Law and Policy Center. “Exelon coming out to oppose reasonable incentives that are working to spur wind power development is just tone-deaf.”

To set the facts straight, the wind energy PTC has not been in place for 20 years. It’s been allowed to expire three times since 1992, prompting dramatic drops in wind power installations, demand for equipment and job creation. See the the AWEA’s “Save USA Wind Jobs” website for more.

Chart Courtesy: American Wind Energy Association (AWEA)

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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.



  • Brian Donovan

    Wind, solar and waste to energy NEVER DRIVE PRICES NEGATIVE, they just stop putting power on the grid. It’s the code.

    It’s nuclear and baseload coal that can’t load follow or throttle and they have driven price negative long before there was any solar or wind.

    Nuclear get 50 times the gov breaks that solar or wind do total, and that’s what buys politicians. The gov cheese per MWH is also great for nuclear than for solar and wind over similar development times.

    Nuclear power cannot run one second without taxpayer/gov protection from liability.

    Why do pro nuclear folks deny that?

    Solar and wind need the same peak/reserve generators baseload inflexible coal and nuclear need, and we have overbuilt it.

    We need to devolve control and ownership to municipalities. Privatization of natural monopoly is a terrible idea, even with gov oversite.

    Now we have a situation where renewable energy is far cheaper than fossils or nuclear, wen you remove gov breaks,but dinosaur generators are paid cost plus, and they are losing their shirts as cost fall.

    Solar and wind kill in the daily market because they have near zero incremental costs, no fuels.

    So now the old gen folks are again the free market. What a surprise.

    They will fight tooth and nail.

    Install your own solar while you can.

  • Pingback: U.S. Wind Industry Adding Record Number of Wind Turbines in 2012 | PlanetSave

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  • http://www.facebook.com/GreenSpiralDragon Jamie Clemons

    If we don’t support wind and solar we are in serious trouble, not only because of the climate. If we don’t develop this important emerging industry then the Chinese will and we will be buying it from them like everything else. We need to develop it because it makes sense. It provides power when it is most needed that is almost free after the initial installation cost. More and more municipalities are adding their own energy projects because in the long run they can actually generate revenue from them. 

  • Bill_Woods

    $12 billion seems pricy for a one-year extension; where does that figure come from?

    $12B / 2.2¢/kW-h = 5.5e11 kW-h = 62 GW-yr
    If that’s 10 years’ of production qualifying for the PTC, then 15-20 GW of capacity. But that’d be 2-3 times as much as last year, which isn’t going to happen.  What am I missing?

  • Mickey M.

    Historically, Exelon has been a horrific operator of nuclear power plants within its home state of Illinois. Inexplicably, Exelon expanded its nuclear “fleet” into New York, New Jersey, Pennsylvania, and Maryland to become the largest nuclear utility nationwide. Now they say the potential of subsidized wind farms might affect its bottom line for shareholders? Exelon CE Christopher Crane is showing very clearly that he is willing to act very irresponsibly despite the fact that a significant portion of his nuclear “fleet” is out of state.

  • http://ronaldbrak.blogspot.com.au/ Ronald Brak

    The energy Production Tax Credit has helped the wind industry develop.  But that is not its purpose.  Its purpose is to make life safer for Americans, and by extension make life safer for people in the rest of the world.  Wind energy displaces fossil fuel use.  This reduces greenhouse gas emissions which reducess the danger of climate change.  Reduced fossil fuel use also improves air and water quality reducing medical costs for Americans and allowing them to live longer and healthier lives.  The PTC does this at a very reasonable cost.  While a carbon price would be a more economically efficient way to achieve these goals, in its absence the PTC should be kept or improved.

    • Rusureuwant2know

       We do not need to cut CO2 – that is a myth that has been perpetrated on us by warmists. It’s time to cut all subsidies – we have no idea how much what the real price of anything is when we are paying twice for a product.
      It does not make sense to be putting these things in the middle of farm
      fields when they take 3-5 acres each. With so many in rich agricultural areas, they are
      seriously cutting into our capacity for food production as is corn for ethanol. Corn is for eating. Oil is for cars. Land is for growing things, not for “wind farms”.
      I notice the writer failed to mention that turbines use a lot of oil and neglected to mention the unregulated pollution that happens when these things catch fire or are struck by lightning.

      • http://soltesza.wordpress.com/ sola

        Sorry, but this is rubbish.

        The most knowledgeable climate scientists of the world publicly say that climate change is due to CO2 emitted by humans.

        I believe them, not you.

        So, we DO NEED to cut CO2 and this can be done efficiently by wind energy production.

  • Eric_Hendrixson

    $12 Billion Tax Credit = Cash from the federal government to various large corporations.  Job loss = 37,000.  That is $324,324 per job.  And this makes sense, how?  It is time to eliminate this government give-away!

    • Anne

      Wind produced 119 TWh in 2011.  An incentive of $0.021 per kWh means an annual cost of $2.5 B.

      Where the $12 B comes from, I don’t know. Perhaps the PTC extension is for 4 more years, or also for other renewable energy sources (geothermal/biomass)?

      Apart from the 37,000 jobs, obviously there is another great benefit: clean energy. The health care and other externalised costs of coal amount to a hidden subsidy of  $0.09-0.18/kWh. Using the lower estimate, and assuming 2 kWh of wind displaces 1 kWh of coal (+ 1 kWh natural gas), the PTC is a fully economically justifiable measure. ROI is >100%

      http://grist.org/article/2011-02-16-what-is-coals-true-cost/

      • Bob_Wallace

        Good points Anne.  

        I’ll bet Eric and people like him don’t like the idea of their hard-earned tax dollars having to be spent by  the government to support coal by paying for all those health problems coal causes.  I’m sure they must applaud getting coal off our grids and saving taxpayers serious money.

        We should hear from him soon.

        Or not….

    • Ross

      Since we’re playing makey-upy numbers here’s a few more.

      It is actually over 10 years and it will create 100,000 jobs on top of the 37,000 it saves so that figure comes to $8,759 per job. 

      The downside is the world becomes a better place.

      • Bob_Wallace

        Oh, nooooozzzeee!!

        We can’t be spending good tax dollars on making the world a better place.  

        We need to cut taxes for people who play around with dancing horses!  That’s what America is all about!!!

        (Great news on the Mars landing.  Science wins another one….)

        • Ross

          Oh wow, is is down safely? YES!

  • Anne

    “And I think that’s enough time to jump-start an industry, 20 years”

    Yeah, let’s apply that logic to nuclear power too. After 60 years still not able to stand on its own legs without government handouts.

    • Eric

      There is no government support for Commercial Nuclear Power.

      • Bob_Wallace

        You have got to be kidding!

        Government loan guarantees.

        Free unlimited insurance coverage.

        Taxpayers are on the hook for nuclear.  

        In fact, local taxpayers/customers now are getting the risk put on their shoulders by being forced to pay for construction of new nuclear.  Customers’ money is being seized and if the plant in never finished their money simply goes up in smoke.

        The state government forced this rotten fish down citizens’  throats. 

        • http://soltesza.wordpress.com/ sola

           Well said.

      • Matt

        WTF?

        • Bob_Wallace

          Succinctly said…

      • http://soltesza.wordpress.com/ sola

        Oh yeah, this is why NOBODY is developing a nuclear power plant from commercial financing and insurance.

        After Fukushima, no bank in the world will finance a new nuclear reactor and no insurance company will cover it.

    • http://profile.yahoo.com/VVEBBJD5VRAUPKIL5EVV7IFHMI frank

      Oil and gas still get subsidies, either level the playing field or stop playing with the free market!

    • http://www.facebook.com/predrag.raos.3 Predrag Raos

       Not jump-start in 20 but in 2000 y. Windmills are an ancient Phoenician invention, made obsolete by steam engine. Stop investing in this retrograde and retarded technology, there is really nothing new in it. It’s new only because it’s long forgotten, so it has never seen before flavor for all ignorants. What’s next? Stone axe?

      • Bob_Wallace

        Ignorant post.

        To say that there is nothing new in wind technology is either massively ignorant or a massive lie.

        What’s next Predrag, telling us that breathing coal smoke is good for our health?

        • http://soltesza.wordpress.com/ sola

          I believe he would very quickly change his opinion if he got forced to move either next to a coal power plant or a wind farm.

        • http://www.facebook.com/predrag.raos.3 Predrag Raos

           The funny thing is that energy & polution & GW problems were solved 50+ years ago: go nuclear. Only oil-loby induced nuclear histery and greenatics stopped its development, leading the world into eco-arrmagedon.

          • Bob_Wallace

            Actually, that’s not correct.

            The nuclear industry failed because reactors cost too damned much.

          • Brian Donovan

            Most nuclear engineers, scientists, and fans
            will just dismiss your “fears” and ignore or tell you it’s
            no problem without testing to protect their nuclear dream. They have
            thrown away samples, refused to collect samples, refused to properly
            thoroughly analyze sample, and refused to publish detailed reports on
            the process and results. Against all world science they have not
            counted exposures below .1 Sv, and will not accept that inject alpha
            emitters expose tissues to thousands of time the Sv the same source
            would externally.

            Look at this photo:
            http://nonuclear.se/deltredici.d5.particl.of.pu.html

            It’s
            a 1 micron PU particle in pig lung tissue. The tracks are from just
            48 hours, and the PU will emit for thousands of years.

            If
            you have studied nuclear radiation biological effects, you know the
            that RADs are the energy absorbed per kg, Severts and rems are
            calculated from that, or are supposed to be.

            Many
            nuclear power captive institutions calculate it differently. They see
            that particle irradiating some few micro grams, but use the person’s
            total weight instead, or sometimes the weight of the organ. Really,
            you can research this yourself. So you get pro nuclear folks claim:
            1/5000 increase in cancer risk, and .02 Sv, when it’s tens of
            thousands of Sv per year. Cancers start small, not in organs, not in
            the body, but in little 100 micro sized clumps, the very size that
            ingested alphas emitters expose.

            Like so many old institutional lies and mistakes, people no longer even stop to think about if they are true or not.

      • Anne

        I pointed out that nuclear power has been subsidised for many more years to show that the CEO of an energy company that has a large nuclear portfolio should know the dangers of using that argument.

        Whether wind power is 20 years old, or 2000 years or 200,000 years is irrelevant. The only question is: are there enough benefits to justify it? The uniquivocal answer of course is: yes. No emissions, no dependency on a limited  resource. The benefits are clear and undeniable.

        And if you think it’s long forgotten, you should visit The Netherlands one day. Wind power has never left our country. We’re merely witnessing the third youth of wind power.

        (The 2nd youth being the much improved and well known Dutch windmill, mainly used for drainage work.)

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