The Institute for Energy Research (IER) urges the United States to reform its approach to renewable energy, saying that Germany also needs to consider reform, according to an IER news release.

In Germany, since January alone, wholesale power prices have dropped by 20% because of COVID-19 lockdowns, which resulted in the renewable surcharge being increased. The release notes that Germany heavily taxes for the added costs of wind and solar power, meaning that consumers are making up the difference between the payments made to investors and the wholesale power price.

The surcharge, the release states, has cost consumers about $29.4 billion this year.

German Chancellor Angela Merkel, in an attempt to help consumers, announced that government funds would help to cut the surcharge by 2 cents per kilowatt-hour next year, which will cost the government about $12.4 billion.

In the United States tax credits and mandates on wind and solar power that were supposed to be temporary, have since been extended at least a dozen times since 1999, the IER release states.

Wind and solar energies are subsidized by the tax credits, which force those energies into generating systems, the release states, adding that legislators want to extend the credits again now due to the coronavirus.

The most recent proposal by House Democrats allows for the option of direct payments rather than a credit on investors' taxes, which the legislators believe will encourage investment.

House Speaker Nancy Pelosi (D-Calif.) and other Democratic leaders want to include the extensions of the tax breaks in a $1.5 trillion infrastructure package called the Moving Forward Act. It extends the tax breaks for onshore wind developers for another five years and another six years for solar developers.

IER says the current subsidy system is much better than the tax deductions but the proposal that includes direct payments would be better.,