The $1.5 trillion infrastructure bill passed by the U.S. House July 1 will extend a variety of financial breaks for renewable energy projects long subsidized by taxpayers, but it faces an uncertain future in the Senate.
Included in The Moving Forward Act (H.R. 2) are provisions to extend both the Production Tax Credit (PTC) and the Investment Tax Credit (ITC) for renewables and other green initiatives that have run into the billions.
Senate leaders have vowed not to take up the measure, and the White House has indicated it will be vetoed if presented to President Trump.
Wind industry subsidies started nearly 30 years ago, and the push to extend them hasn’t waned, Angela C. Erickson, author of The Production Tax Credit: Corporate Subsidies & Renewable Energy, told the Texas Business Daily by email.
“The Production Tax Credit is a federal tax handout for wind energy providers,” Erickson said. “It was created in 1992 for a variety of renewable energy sources with the hopes of improving energy efficiency.”
Supporting the industry by incentives could erode affordability and market competition, she noted.
“The PTC now only applies to wind, not because wind is more efficient than the other renewable energy sources but because the payoff has been worth the wind industry's lobbying effort,” Erickson said.
“Big energy companies like NextEra Energy, Duke Energy, and BP directly benefit from the subsidies.
“But they are not the only winners," Erickson said. "Other corporations get increased revenues or savings from the PTC, including wind turbine makers like General Electric, large consumers of energy like Walmart and General Motors, and major funders of projects like JPMorgan Chase.”
A recent Department of Energy (DOE) laboratory study found that wind turbines often fall into disrepair when the tax credits expire.
“It’s a challenging policy issue,” Andrew Kleit, professor of energy and environmental economics at Pennsylvania State University, told the Daily. “Tax credits make it make it easier for renewables to enter the market [yet] a lot of times they’re in low pocket, smaller areas, like in west Texas, where the power can’t reach as many consumers, and so you don’t know how the tax subsidy is working.”
The amount of savings tied to wind power is subject to debate.
‘Ratepayers will see some decrease in prices depending on where the generators are located,” Kleit said. “Wind generation is very site-specific.”
There have been efforts to more fully evaluate how the tax credits function.
"There is significant debate in the industry and among policy makers on the impact of the production tax credits on the Texas competitive market and the impacts to the consumers,” Andrew Barlow, director of external affairs at the Public Utility Commission of Texas (PUCT), which regulates electricity, told the Daily by email. “During the last legislative session, there was a bill to mandate a study on the issue; however, it did not become law. To our knowledge, such a study has not been performed.”
Last year the Texas Senate passed SB 2332, to assess the effects of tax credits on the renewable energy sector, but it did not receive the same backing from the House.
A spokesperson for sponsor Sen. Kelly Hancock (R-North Richland Hills) did not respond to a request for comment from the Daily.
The Moving Forward Act has solid support from the green energy industry.
“The Production Tax Credit is a proven, successful, job-creating policy that has helped the U.S. wind industry grow into what it is today - a major economic engine for the nation,” Gregory Wetstone, president and CEO of the American Council on Renewable Energy (ACORE), said in an email response to the Daily. “Tax incentives remain the renewable energy sector’s most effective federal policy tool, but many of them are phasing down, in need of modernization, or will soon expire.”
He added that the Moving Forward Act will provide an effective policy platform for renewables deployment over the next five years.
“In addition to the PTC and ITC extensions, the energy storage, offshore wind, and direct pay provisions would be especially helpful in realizing the full potential of the renewable energy sector,” Wetstone said.
Others argue there need to be alternatives to the taxpayer-funded subsidies.
“The web of special interests who benefit from keeping the PTC are large corporations that do not need another tax break,” Erickson said.