Stop Coddling 125 Year Old "Infant"
This is a mature technology with very difficult economics due its high fixed costs and its inherent intermittency. It also enjoys the same double-blessing from government that ethanol did until recently: a lavish tax credit layered on top of a mandate. In this case the mandate is from 28 state governments with various renewable portfolio standards. More than 75 percent of wind deployment has been in the last five years as the RPS requirements have taken hold, indicating that it is the mandates, not the subsidies, driving deployment.
All states lose in this scheme. The non-RPS states see their tax dollars flow into RPS states with nothing to show for it. But the RPS states lose too, because the PTC is so lavish that it causes negative pricing episodes in which wind generators actually pay the electric grid to take their power just to earn more federal subsidies. Nuclear and coal plants that can't be easily ramped down are forced to pay, resulting in early retirement of generating assets and undermining the economic incentive to build out conventional capacity. Given wind's inherent intermittency, this poses enormous reliability challenges in the RPS states.
So it's reasonable to conclude that the PTC actually rips off the non-RPS states in order to undermine the effectiveness of the RPS in the other states. It's a lose-lose. Or really a lose-lose-lose when you consider this havoc wreaked on electricity markets costs taxpayers $12 billion per year.
Which raises another question: why are so many Democrats insistent on extending this particular "tax cut for the rich" contrary to what is otherwise their central political talking point?
Enough is enough. After 20 years of federal subsidies this 125 year-old technology can, if not stand on its own, at least stand on mandated use in more than half the states.
© Copyright 2012 Phil Kerpen. He is the president of American Commitment where he first shared this article as a comment response to a National Journal's question of the week on Wind Tax Credit, and the author of Democracy Denied: How Obama is Bypassing Congress to Radically Transform America – and How to Stop Him. Phil Kerpen is a contributing author for the ARRA News Service.
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