The federal wind Production Tax Credit (PTC) is a substantial subsidy that has provided the wind industry billions of taxpayer dollars and is working to harm reliable, affordable sources of electricity generation such as natural gas, coal, and nuclear power.
Originally published on November 24, 2014.
IER’s Case Against Wind Welfare examines the numerous flaws with the federal wind Production Tax Credit (PTC). Key findings include:
The PTC is costly. A two-year extension will cost $13.35 billion, which is enough to pay 124 million Americans’ monthly electricity bills.
The PTC encourages “cannibal behavior.” It allows wind producers to pay the grid to take their power and still profit. This “negative pricing” contributed to premature retirements of Dominion’s Kewaunee Nuclear Plant and Entergy’s Vermont Yankee Nuclear Plant.
Americans oppose the PTC. A survey by the American Energy Alliance finds that 65 percent of voters believe two decades worth of tax credits for the wind industry is long enough.
The PTC threatens grid reliability. Wind typically produces the most power when it is needed least: one study finds that “over 84 percent of the installed wind generation infrastructure fails to produce electricity when electric demand is greatest.”
Wind energy is expensive. When all factors are considered, wind energy costs $109 per megawatt hour, which is twice as much as this year’s average wholesale electricity price of $54 per MWh.
A vote for the PTC is a vote for Obama’s climate agenda. A key “building block” of EPA’s CO2 rule for existing power plants is increased wind generation. But wind energy depends on the PTC: wind installations dropped 92 percent after the PTC expired at the end of 2012.
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Congress enacted the PTC in 1992 as a temporary measure for an “infant” industry. After propping up the wind industry for more than two decades, the PTC has clearly outlived its usefulness. As our analysis shows, the costs of the wind PTC vastly outweigh the supposed benefits.
To read the full case against the PTC, click here.
The Institute for Energy Research (IER) is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today’s global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.
