Enough is Enough: After Nearly 40 Years It’s Time to Slash Massive Subsidies to Wind & Solar

One thing you’ll never, ever hear from the crony capitalists profiting from wind and solar is a call to cut the subsidies that sustain them.

Remarkably, whether in Germany, Australia, the States or Europe renewables rent seekers all speak the same language.

When talk turns to subsidies, you’ll only ever hear words like ‘more’. Challenge them about their nonsensical claims that wind power is cheap and truly competitive with coal and gas, they’ll start pleading about not doing away with subsidies, ‘just yet’.

Some cynics might suggest a needy form of addiction. STT likens it to the Never Ending Story.

Back in 1983 the American Wind Industry Association claimed that solar and wind would be “competitive and self-supporting on a national level by the end of the decade if assisted by tax credits and augmented by federally sponsored R&D”. That was 38 years ago. And there was no lack of assistance in the form of tax credits and federally sponsored R&D, along with a whole bunch of other punitive mandates and targets designed to cripple conventional generators and favour chaotically intermittent wind and solar.

Now, as then, claims from renewable energy profiteers that wind and solar are truly competitive with nuclear, coal or gas evaporate the instant policymakers start talking about removing subsidies to wind and solar.

With their 40th birthdays approaching, the wind and solar ‘industries’ are a pair of perpetual infants who – like Peter Pan – are determined to never grow up.

Oliver McPherson-Smith, like STT, reckons enough is enough and that it’s high time these so-called ‘infant industries’ learned to stand on their own two feet.

Solar and Wind Have Outgrown Their Tax Credit Allowance
Real Clear Energy
Oliver McPherson-Smith
9 November 2021

Faced with little work and unaffordable rent, countless millennials bit the bullet and moved back home with their parents during the pandemic. Temporary solutions—however awkward—are sometimes necessary. The Democrats’ reconciliation bill, however, is set to make America’s longest ‘temporary solution’ more permanent and more expensive.

Wind and solar energy producers have enjoyed temporary federal tax credits for three and four decades, respectively. Congress is set to swap their allowance for a trust fund. To spur innovation among genuinely start-up renewable industries, it’s time to give wind and solar some tough love and evict them from the public purse.

The federal government provides a variety of tax credits for renewable power generators through two programs: the investment tax credit (ITC) and the production tax credit (PTC). The ITC provides credits up to 30% for investment in a variety of energy generation projects. While niche technology such as hydrogen fuel cells and waste energy recovery property benefit from the program, the most lucrative benefits are ironically reserved for the most established renewable technologies, namely wind and solar.

Most of the credits are currently set to phase out at the end of 2023, but offshore wind will enjoy the highest credit (30%) until 2025. That generous discount is only topped by the benefit given to commercial and utility solar or geothermal projects, which enjoy a permanent 10% tax credit.

The second program is the renewable electricity production tax credit (PTC), which gives various renewable generators a per kilowatt hour (kW/h) credit for their first ten years of operation. First enacted in 1992, the PTC was initially slated as a temporary program that would run until 1999. It has since been extended at least 12 times, at a cost of $5.1 billion. While geo-thermal and closed loop biomass enjoy the largest credit at 2.5 cents/kWh, wind power once again enjoys a higher rate of 1.5 cents/kWh than its competitors, which get 1.3 cents/kWh.

The Democrats’ Build Back Better reconciliation package seeks to expand these two programs, raise their value, and convert them into optional direct payments. This last change would constitute a subtle but significant shift in how federal taxpayers bankroll renewable energy producers. After decades of generously reducing their IRS bill, taxpayers would then be forced to cut them a check.

But the most basic problem with these tax ‘credits’ is that they no longer resemble support for start-up industries. Rather, they’re becoming a public trust fund for the renewable industry’s middle-aged child. Federal tax credits for non-fossil fuel energy projects are nothing new, the first of which were implemented through the Energy Tax Act of 1978. For reference, Microsoft was founded in 1975 and Apple in 1976. The federal government’s renewable tax scheme is now older than the majority of Americans. Any ‘temporary’ solution that runs for more than four decades deserves a serious conversation around the dinner table.

Given the financial benefits that the IRS has bestowed upon the wind and solar industries, it’s no surprise to see them doing well. Rather than start-ups in suburban garages, companies generating power from wind and solar are listed on the S&P 100 and represented on the Fortune 500 list. Moreover, an increasing number of America’s largest companies are pledging to buy more energy from wind or solar sources. To be clear—successful American businesses that create jobs, compete for consumer dollars, and diversify America’s energy sources deserve to be commended. But generous tax credits shouldn’t be a permanent entitlement for thriving businesses.

Recent history shows that the federal government has a less than stellar record of picking clean energy winners. But if the Biden-Harris team and their congressional allies can’t drag themselves away from the renewable roulette table, they should at least make an informed bet on industries that could use the help. A cursory glance at the federal government’s own renewable generation statistics would go a long way.

In 2019, utility-scale wind had a domestic capacity of 103,571 megawatts (MW), while solar’s total capacity sat at 60,681 MW. By contrast, fuel cells have a paltry 250 MW capacity and the American industry is far from leading the pack. Earlier this year, a hydrogen fuel cell plant opened in South Korea with a capacity three times higher than America’s largest facility.

The domestic wind and solar power industries have come a long way in recent years, and American consumers benefit when their energy comes from diverse sources. After decades upon decades of federal tax benefits, it’s time for these legacy renewable industries to leave the nest and make way for a new generation.
Real Clear Energy

About stopthesethings

We are a group of citizens concerned about the rapid spread of industrial wind power generation installations across Australia.

Comments

  1. Emma Richey says:

    I think there needs to be a petition. More and more people are being pushed into fuel poverty because of energy prices and paying for subsidies is a huge contributing factor.

  2. How are all the Wall Street investors going to make easy money with no risk if we get rid of the subsidies?

  3. Peter Pronczak says:

    40 years of rip-offs by RE is peanuts. Government has never been about equity, it exists to keep workers in their subservient place. And it’s about time the purpose was woken up to.
    A redefinition of democracy is required; it should not be the ruled ruled by the ruling class. Nor should its finance be hidden in the status of charity. If government did its job there would be no need of financial charity.
    Are we over-governed by the over paid? What exactly do politicians of privately run political parties actually do?

    In the scheme of things, being social beings, religion is the handmaiden of class control that pretends to alleviate the fear of the unknown to a higher authority – it is delusional. No less so than RE being some sort of saviour of humanity.

    You be the judge after removing prejudice.

  4. Since the British EPR environmental study shows that, all included, nuclear releases about 5.5gr CO² / KWh, why should we still be discussing “renewables”? None of them, wind, solar, biomass, releases less CO² than that!
    All of their economics are far worse than nuclear, worse than burning bank notes!

  5. May I suggest a new term instead of “having a capacity of” which always presents the highest amount that could ever be produced yet is never produced in that amount, let’s say something more like “pie in the sky goal of output” or “obvious the marketing departments are all exaggerating again” or “a capacity that is never reached and so intermittent it’s useless”.

    It should be a requirement that they provide maximum capacity in WATT HOURS. That would fix that, they’d have to estimate the WATT HOURS produced in a year based on the area’s wind conditions and other factors thus dropping those high output numbers back down to Earth. That of course will also cause those “can power 1 million homes” claims to drop to more like “can power 80,000 homes’ night lights”.

    Homes do not use power, only appliances and lamps and electric heaters do, that also should be made clear.

    A marketing incentive they could use to help sell these inefficient devices is offering free carbon blankets to help insulate homes where these subsidy suckers are installed.

    https://horsepower.net/carbon_comprises_so_little_in_th.html

    • Andreas Demmig says:

      “subsidy suckers” is a nice expression, especially when you translate it into German : Suckers also mean “Vacuum cleaner”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: