Forty-one organizations are urging the U.S. Senate to stand up against the wind lobby and eliminate tax credits for wind power.
The American Energy Alliance (AEA) recently announced that dozens of groups sent a letter to Senate Majority Leader Mitch McConnell (R-Kentucky) and other Republicans to stand up to the powerful wind lobby. AEA and the other 40 groups are calling for an end to the production tax credit (PTC) for the electricity generated by windmills, which they said is intermittent.
“The PTC has drained tens of billions of dollars while foisting unreliable energy onto the grid," AEA said in a statement. "It has now been extended a dozen times. Enough is enough. AEA fully supports legislative efforts like S. 4678 / H.R. 8359, the PTC Elimination Act, proposed by Sens. James Lankford (R-Oklahoma), Kevin Cramer (R-North Dakota), John Hoeven (R-North Dakota), Shelly Moore Capito (R-West Virginia), and U.S. Rep. Kenny Marchant (R-Texas) to finally end this unnecessary tax credit.”
Lisa Linowes, executive director of Wind Action, said the wind production tax credit was first established under the Energy Policy Act of 1992.
"The tax credit is earned on every kilowatt-hour (kWh) of energy produced by a wind project during its first 10 years of operation," Linowes told Washington D.C. Business Daily. Cost-of-living adjustments increased the value of the tax credit from the original 1.5 cents per kWh [in 1992] to 2.5 cents per kWh for projects that started construction in 2016 and are placed in service before the end of 2021."
U.S. taxpayers have been paying for this expensive subsidy for an unreliable energy source, she added.
"The cost of the wind PTC is significant for U.S. taxpayers," Linowes said. "According to the U.S. Treasury, the wind PTC is the most expensive energy subsidy. It is estimated to cost taxpayers $4.3 billion in 2020. This is up from $1.5 billion in 2014. For cumulative cost over the 10-year period from 2020-2029, is estimated to reach $33.75 billion."
The numbers Linowes cited can be found in the table the government's website. She added that in that same government table, the Energy Investment credit (ITC), which is generally available for solar projects, is expected to cost $4.5 billion in 2020 and $26.9 billion cumulatively from 2020-2029. "The PTC and ITC together dwarf any of the other energy subsidies," Linowes said.
The wind PTC, according to Linowes, artificially lowers the price of wind energy by providing a revenue stream outside the energy market. "In other words, wind project owners can afford to sell their generation at a lower price than they could otherwise since the PTC provides a separate revenue paid for by U.S. taxpayers at large," she said. "When the wind industry claims it is cost competitive with fossil generation, keep in mind that they are comparing their subsidized price against the market price of energy."
If the 41 groups do get the Senate to eliminate the wind PTC, the cost of their energy would have to be increased.
"If the PTC were to disappear, wind developers would have to increase the price of their energy substantially," Linowes said. "At 2.5 cents per kWh, the PTC’s pretax value is roughly 3.0 cents per kWh, which equals or exceeds the wholesale price of electricity in many parts of the country."
The wind energy industry continues to grow only as a result of the PTC.
"For nearly a decade the wind industry has touted that it was ready [or nearly ready] to move off the wind PTC and grow on its own without public assistance," Linowes said. "The five-year phase-out of the wind PTC that Congress passed in 2015 was intended to provide the industry with a glide path off the tax credit. But in 2020, federal subsidies still represent between 50-65% of project costs. In the period from 2016 to 2020, developers made no apparent effort to reduce reliance on the subsidy. Instead, they focused solely on beginning construction of as many wind facilities as possible, especially in the years 2016 and 2017 when the subsidy had the greatest value."
If the tax credit is allowed to expire, Linowes said, it is unlikely the industry will be able to make up for the loss of the PTC, adding, "It is for this reason that the wind industry no longer discusses weaning itself off the subsidy. We do not believe the wind industry can grow without the wind PTC."
The cost of wind energy is high and it is not a reliable source of energy, according to Linowes. When asked if the investments in wind energy would be as attractive and viable with PTC, she said, "No. Under the current state and federal policies for renewable energy, there would be no incentive to build wind energy without the wind PTC. The cost of the energy is too high without the subsidy."
U.S. taxpayers should not continue to prop up the wind industry with the tax credits and there are other efficient means of producing clean energy, she said.
"Wind energy is an intermittent energy source that can only be produced when the wind is blowing," she said. "Even with more than 100,000 megawatts operating in the U.S., very little of the capacity is relied on to meet critical peak periods. This is particularly true during hot summer afternoons when demand is highest. Despite the rhetoric that the United States can be powered 100% by wind energy, the reality is much different. There are other, more efficient ways of producing clean energy that can reliably meet demand that do not require billions in public subsidies."
Thomas Pyle, president of the American Energy Alliance, in a statement, also said the PTC should end, and U.S. taxpayers should not subsidize the wind industry.
“While America works its way back to economic strength following the COVID-19 pandemic, leave it to the wind lobby to add more drag," he said. "At a time when the fundamentals of value and low costs are at a premium, undermining both with a perpetuation of the PTC could not be more foolish. The wind industry claims it is no longer an infant and is now the least expensive source of new electricity generation. It’s time for them prove it by standing on their own two feet.
"American families, who are facing continued economic uncertainty, shouldn’t be forced to reach into their pockets to subsidize Big Wind. The wind lobby has shamelessly attempted to capitalize on the pandemic to coax Congress into breaking their deal to phase out the PTC this year. The PTC has run its course. It’s time to move on.”