Will wind power subsidies hit an updraft at the edge of the fiscal cliff?

One of the minor aspects of the fiscal cliff talks — or lack thereof — has been whether to extend the production tax credit (PTC) for wind energy projects.

Newly re-elected Republicans Sen. Dean Heller and Reps. Mark Amodei and Joe Heck have at one time or another indicated support for renewable energy projects, such as continuing this handout that would add an estimated $12 billion to the federal deficit in 2013.

Windmills in Spring Valley.

Nevada already has a utility-scale wind farm near Ely that receives the 2.2-cent per kilowatt-hour PTC tax break. Even if that tax break dries up the jobs of the 13 employees operating the Spring Valley Wind project are probably safe, since most of the expense is in the capital investment and it has a long-term contract to sell power to NV Energy at 9.8 cents per kilowatt-hour — at least triple the cost of natural gas-generated power. Besides that it was built on Bureau of Land Management land.

A similar project planned by BLM land near Searchlight might never get off the ground if the subsidies are not renewed. The project has cleared the Final Environmental Impact Statement stage and is awaiting what is called the record of decision. But the market might not be enough to make it feasible.

Phil Gramm, a former Texas U.S. senator, writes in today’s Wall Street Journal that wind power has been a drag on the economy due to the tax subsidies and higher power costs.

“Subsidized, wind-generated electricity is displacing other, much cheaper sources of power,” Gramm writes. “The subsidies are so high that wind-power producers can pay utilities to take the electricity they produce and still make a profit. Such ‘negative pricing’ has occurred for some time in the Midwest, the Pacific Northwest and in Texas — and, according to the Energy Information Administration, it will likely grow.”

Another problem with wind is that it is totally unreliable. Gramm noted that one day this past summer Chicago’s wind power farms produced a mere 0.02 percent of capacity. And one day in February Germany got a third of its power from wind, but four days later it got none.

When the wind does blow, redundant fossil fuel plants must operate on standby and produce greenhouse gases. When it doesn’t blow, they must kick on to full power quickly.

The subsidies, begun 20 years ago, were supposed to be temporary, just until the technology was improved enough to compete on its own. They have been extended seven times and now the industry pleads for just a little more, perhaps a phaseout over six years.

In an editorial today opposite of Gramm’s op-ed (That’s why they call it an op-ed), The Wall Street Journal points out that, in addition to the federal grants, subsidies and tax credits, 30 states mandate some percentage of their power supply come from expensive renewables such as wind. Nevada is one of those states. No one has ever been able to calculate the grand total of handouts for the “green” energy industry or just how much damage it has done the economy.

“Calling wind a ‘mature industry’ in a speech on the Senate floor,” the editorialists write. “Tennessee’s Lamar Alexander said that throwing more money at the technology ‘at a time when the government is going broke, is as brazen as a bank robbery in the middle of the day on Main Street. … I hope it becomes the poster child for what’s wrong with spending in Washington.’ There aren’t enough walls in Washington for those posters.”

This is a chance for Washington to stop throwing away at least a tiny bit of our money, but the fear is that too many wind-state Republicans will not be able to resist the urge to join with all the Democrats and bring home this tainted bacon. May we hope this does not include Heller, Amodei and Heck. But those chances are slim.

What future windmills near Searchlight would look like. (BLM illustration)

What future windmills near Searchlight would look like. (BLM illustration)

5 comments on “Will wind power subsidies hit an updraft at the edge of the fiscal cliff?

  1. Vernon Clayson says:

    I earlier mentioned windfalls from windmills, these windmills are as much about producing electrical power as Obamacare is to producing medical care.

  2. So true: “these windmills are as much about producing electrical power as Obamacare is to producing medical care.”

    ________________________________

  3. Joe says:

    This is same song second verse of the ethanol boondoggle. What that does best is raise the price of corn, which raises the price of livestock feed, which raises the price of food, while making less than negligible impact on foreign oil dependency. The subsidy now has a life of its own with wagons ready to circle at the least hint of whacking the misspent handout. The cost benefit ratio is 180 degrees out of phase, which is about par for the course for the misdirected, miscreant morons who should be reading MAD magazine in a padded cell instead of making mud-pie national policy. The smell is the same. The source is different.

  4. Rincon says:

    Funny thing is, it’s the Conservatives (but not fiscal Conservatives) in farm states like Iowa that are defending ethanol. The environmentalists swore off of it long ago.

    Time was, the only way to make pork from corn was to feed it to pigs. Now we have ethanol.

  5. Steve says:

    Yeah, not fiscal Conservatives…..Addicted Conservatives.

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