Give Robert Bryce credit. The Senior Fellow at think-tank Manhattan Institute (manhattan-institute.org/html/ir_18.htm) knows how to write a convincing anti-wind column. Actually, it’s quite easy: Ignore anything remotely positive about the wind industry, don’t pose obvious questions that might reflect badly on your argument, and hope the equally un-inquisitive reader never gets to the end of the article. Should we expect to read equal treatment of wind’s competitors, the oil, gas, and atomic industries? Don’t count on it. Let’s first state our case and then look at his arguments.
Wind is a fledgling industry, in its model-T era so to speak, but developing quickly. It’s disruptive technology because it threatens to produce power at lower cost than conventional thermal generation methods. Opponents can clearly see that and so work to squash it.
The wind industry is now at a cross road of sorts with the expiration of the Production Tax Credit at year’s end. The credit rewards wind-energy producers with 2.2 cents/kWh. It rewards production, and it’s just enough to make wind farms profitable. The genuine concern is that if the PTC is not renewed, thousands will lose their jobs. That is true. Construction crews will be let go and factories, many European turbine manufacturers that invested millions to set up shop in this country, will close their doors. Supply chains will also dissolve. It takes a cold heart not to care about those companies and people.
Now let’s address the criticisms that the wind industry receives excess Federal support.
My first observation: How odd that the subsidies and tax credits received by the coal, gas, and atomic industries do not bother critics. A fair argument would be to eliminate all tax breaks. Critics do not make that one. They are also not bothered to ask why only the wind industry has limits to its tax credits.
The truth is that the Federal and state governments frequently give tax breaks to new companies to get them on their feet. The Atomic industry got its start during WWII with enormous government support, and rightly so. And when the war ended, the funding kept on coming to beat some of that sword into a plow share. Atomic energy was to be so cheap it would not have to be metered. Remember that one?
One argument is that if the same level of subsidies given to wind over the last few years were applied in proportion to thermal producers, the amount would reach $76 billion. Thankfully, that has not happened. But here’s a counter thought: If the atomic industry (just to pick on one competitor) has reduced its tax credits at a rate of just $0.005 less per kWh than it charged (Wikipedia says the industry produced about 806 TWh last year. Assume the figure an average.) it would have saved rate payers $78 billion over the last 20 years.
One panelist at an AWEA conference suggested six years would be a sufficient PTC extension. Even AWEA president Denise Bode acknowledges that tax credit need not be extended forever. This remarkable admission was left for the end of the critique. It’s remarkable because it’s difficult to image anyone in the coal, gas, or atomic industries suggesting a sunset date to their tax breaks.
The natural-gas industry is really the one to admire. It is so successful its product sells for $2.82/million BTUs. (Henry Hub spot prices, as of June 29, bloomberg.com/energy) For wind to compete at such a low cost today, the figure would have to nearly triple, to about $6.50/million BTUs. It could happen. For instance, with natural gas so cheap, why drill for more? A friend who works for a manufacturer of gas-drilling supplies tells of a recent order cancellation because of just such a slowdown. So expect natural gas prices to rise.
The nice thing about wind omitted from the critique is that even critics know the cost of the fuel to drive a wind turbine. They know what it is today, what it will be in six years, and in 40 years. It is and will be zero. Building the turbine to produce power at the cost of natural gas will happen. It’s just a matter of time.
The truth is that the nation needs wind’s competitors to produce the enormous base load required by an active and prosperous country, and they need wind power as a way to conserve and supplement fossil fuels.
Filed Under: Policy