“If You Need A Tax Credit To Compete, You’re Probably Not That Competitive”
Politico has a column from Rep. Mike Pompeo (R – KS) who is calling for an end to wind power subsidies.
Wind companies and their lobbyists have, for the last year, been telling all who would listen that the expiration of the tax credit could spell doom for their industry. Obama repeats this claim regularly on the campaign trail.
But what does that say about the industry? If you need a tax credit to compete, you are probably not that competitive.
In addition, the tax credit is not de minimis for either taxpayers or companies lobbying for it. It will likely cost the taxpayers more than $12 billion inside the budget window. Worse, the credit is set at 2.2 cents per kilowatt hour.
Just to compare,, the national average for produced power is around 6 cents per kilowatt hour. This means the wind industry gets an almost 40 percent subsidy for each unit it produces. How many companies would like that?
In addition to a 40% subsidy from the federal government, more than 30 states now have some form of a mandate requiring utility companies to get a portion of their power from wind. So not only do wind companies have a heavy federal subsidy, but they have extensive mandates throughout the country forcing Americans to buy their product no matter what the cost.
Which is kind of a scary thing when you think about the feds ending their 40% subsidies. That would mean a big hike in the cost of wind energy (presuming the wind power companies survived) which, in turn, would be passed on to rate payers.
That’s not an argument for keeping the subsidy, mind you, but a commentary on the wisdom (or lack thereof) of government energy mandates.
I’ve been making this same argument for some time now. Recently the Fargo Forum wrote an editorial critical of delays in prolonging wind’s subsidies, saying that the fight over the issue was creating “uncertainty” in the wind energy market. But that uncertainty is a product of the fact that the wind industry would certainly collapse were it not for government subsidies and mandates.
The wind energy subsidy is 20 years old. The idea of harnessing the wind for energy is a lot older (my great-grandparents, immigrants to North Dakota from Norway, used wind power on the farm they started). The simple fact of the matter is that it’s not ready for prime time. It’s expensive and unreliable and no amount of government mandates or subsidies will change that.
Tags: green energy, green power, subsidies, wind energy
