Is the wind industry entering panic mode?

posted at 4:51 pm on December 14, 2012 by Erika Johnsen

The wind lobby is working like their livelihoods depend on it — which is mainly because, they do — to convince Congress to extend the production tax credit, set to expire at the start of the new year, that has diverted taxpayer money their way for decades now. Without the guarantee of continued federal assistance, the wind industry is already starting to bleed jobs, and in their desperation to convince their detractors to continue the credit in at least some capacity, they’re proposing a compromise of sorts in the form of an eventual six-year phaseout.

Wind energy companies have urged Congress for months to extend the so-called production tax credit, which is set to expire this month. The break shaves as much as a third of the costs to generate wind power, and industry advocates contend its loss could cost thousands of jobs. Under the proposal, the credit’s value would fall gradually over the six years.

The credit’s “continued availability for a reasonable period of time will allow the industry to invest in the cost- saving technologies required to finish the job,” the Washington, D.C.-based trade group said in the letter.

The association’s plan would keep 100 percent of the current credit of 2.2 cents a kilowatt-hour for projects started in 2013. The credit would fall to 90 percent for projects completed in 2014, 80 percent in 2015, 70 percent in 2016 and 60 percent in 2017 and 2018, the credit’s final year

As the absolute necessity of the PTC to wind’s ‘competitiveness’ showcases just how thoroughly the industry is still operating based on rent-seeking rather than its own free-market merits after 20 years of government special treatment, many in Congress maintain that this is one big heap of federal largesse that we just cannot afford to continue (read: $16 trillion in debt and counting). There are just too many readily available reasons for why wind needs to finally be pushed out of the nest:

Since first adopted in 1992, the “temporary” production tax credit for wind energy has ballooned from $5 million per year in 1998, to over $1 billion annually today. And even if ended, taxpayers are still obligated to cover nearly $10 billion in tax credits for projects built during the last decade. That’s in addition to an almost $20 billion debt for wind projects eligible under the Section 1603 extension, the renewable energy bailout of 2011. In many parts of the country the PTC actually exceeds the wholesale price of power. …

On another front, how much has wind contributed to meeting America’s electricity energy needs?   A major point of public confusion often advanced by promoters fails to differentiate between maximum total capacities, typically presented in megawatts (MW), and actual predicted kilowatt hours (kWh) that are determined by annual average wind conditions at a particular site. Since wind is intermittent, and velocities constantly change, it often isn’t available when needed most—such as during hot summer days when demands for air-conditioning are highest.

We can expect to hear more and more scary stories from the American Wind Energy Association which, according to Bloomberg, spent $1.1 million in lobbying this year warning of a crushing blow to American energy security and jobs if Congress lets the wind Production Tax Credit lapse. But don’t expect them to mention the high cost of that energy and those jobs, or that most are temporary construction positions, with less than 20,000 involved in the manufacture of parts used in turbines.

For advocates of widespread use of renewable energy, continued government subsidization should not be the goal. Continued federal privilege is hardly a way to encourage price efficiency and market viability, which is the only route through which more and more people will be able to voluntarily and affordably purchase these renewable energies.

Whatever the fate of the wind industry-wide production tax credit, plenty of individual projects and other programs will undoubtedly keep clamoring for money, and I’d wager that the Obama administration will be more than willing to give. The beatings will continue until morale improves:

The wind industry receives subsidies in a variety of ways, the latest example being the Department of Energy’s (DOE) Advanced Technology Demonstration projects. This program is on top of the wind production tax credit, which is worth about 40 percent or more of the wholesale value of electricity—so generous, in fact, that wind producers can actually sell their energy to the grid for negative prices and still collect a profit from the taxpayers. …

Higher costs for a technology should not be a signal for the government to step in and try to lower those costs to make the politically preferred technology competitive. By attempting to force government-developed technologies into the market, the government diminishes the role of the entrepreneur and crowds out private-sector investment. This practice of the government picking winners and losers denies energy technologies the opportunity to compete in the marketplace, which is the only proven way to develop market-viable products.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

I work on I-45 north of Houston. Wind turbine blades are heading south lately to be shipped out, instead of north to be installed.
Confirmed by a relative at the Port of Houston.

tomg51 on December 14, 2012 at 4:54 PM

Is the wind industry entering panic mode?

The answer, my friend, is blowing in the wind.

Try the veal, I’m here all week.

BobMbx on December 14, 2012 at 4:55 PM

Wind power won’t be feasible unless the price of carbon-based energy sources go way up.

Obama is working hard on that.

Paul-Cincy on December 14, 2012 at 4:56 PM

The beatings will continue until morale improves

For a young lady, Erika has got some sophisticated catch-phrases going on. I only vaguely remember that one. It’s AllahPundit-ish.

Paul-Cincy on December 14, 2012 at 4:58 PM

May as well subsidize tulip farms. Oh wait. We do. It is corn ethanol.

pat on December 14, 2012 at 4:59 PM

And the wind cries oh shiit…dun dun dunnnnnnn

Two nights only here at the HotGas Velvet Lounge, shows at 8 and 11.

Bishop on December 14, 2012 at 4:59 PM

Energy Efficiency = (Energy Output) / (Energy Cost)

The higher the output and the lower the cost the higher, the higher is energy efficiency…the lower the output and the higher the cost, the lower is energy efficiency…

In comparison to fossil fuel (oil gas) or hydropower, the Wind and Solar have lower output and higher cost hence lower energy efficiency… In other word, Wind and Solar power are inefficient and hence they are going to fail… At the end the Physics and Economics will always win not matter how much liberals wish otherwise…

mnjg on December 14, 2012 at 5:01 PM

Wind power won’t be feasible unless the price of carbon-based energy sources go way up.

Obama is working hard on that.

Paul-Cincy on December 14, 2012 at 4:56 PM

No doubt this the strategy, but the end result hasn’t been evaluated. To make the market switch to and remain using renewables, the cost of fossil fuels has to remain high. If alternate sources of energy could compete cost-wise with fossil, they already would be.

What this means is the forcing the cost up to force the switch also means the price of energy will remain high. Too high. It doesn’t matter how cleanly or Gaia-approved the electricity is produced if no one can afford to use it.

How many Hotairians can afford a tripling or quadrupling of their energy costs…electric and gas at home, gasoline to get to your job, etc., and you’ll have to add in the cost of everything else that uses energy, like food, clothes, housing…you know, the simple things.

What do you think will happen when it costs $12 to charge your I-Pad once? My guess is, you won’t own (or buy) one.

BobMbx on December 14, 2012 at 5:03 PM

Wind power won’t be feasible unless the price of carbon-based energy sources go way up.

Obama is working hard on that.

Paul-Cincy on December 14, 2012 at 4:56 PM

Ok let us say the communists force the fossil fuel to be way up to make it very costly what are they going to do with the “Physics” part of the issue which the actual energy output… There is no way Wind is going to produce more energy output than fossil fuel…

mnjg on December 14, 2012 at 5:05 PM

I heard on one of the networks a few days ago that the price of gas was dropping because of “the effects of wind, solar and alternative gas production.” Yea, sure. A tenth of a penny for the wind and solar effects and $ 1.00 per gallon drop from the effects of fracking. But they just couldn’t bring themselves to say those terrible words “Fracking lowered the price of gas.”

Fred 2 on December 14, 2012 at 5:05 PM

Is the wind industry entering panic mode?

Meh, why not, everyone else is, why should they be the exception.

SWalker on December 14, 2012 at 5:06 PM

I heard on one of the networks a few days ago that the price of gas was dropping because of “the effects of wind, solar and alternative gas production.” Yea, sure. A tenth of a penny for the wind and solar effects and $ 1.00 per gallon drop from the effects of fracking. But they just couldn’t bring themselves to say those terrible words “Fracking lowered the price of gas.”

Fred 2 on December 14, 2012 at 5:05 PM

LOL… which stupid network was that?

mnjg on December 14, 2012 at 5:10 PM

The credit’s “continued availability for a reasonable period of time will allow the industry to invest in the cost- saving technologies required to finish the job,” the Washington, D.C.-based trade group said in the letter.

Why didn’t they INVEST in COST SAVING TECHNOLOGY years ago? Oh, that’s right, they were too busy sucking at the government teat.

GarandFan on December 14, 2012 at 5:11 PM

1. Its all a fraud: http://www.wattsupwiththat.com

2. Pior man kind had enough common sense not to build tall things where the wind blows hard and fast. ie “Tornado Alley” Texas, Oklahoma ect where they are building lots of them. Off shore where hurricans lurk ect.

3. Salt Water, High Tech computers, Electrical Systems, and the maintance do not mix. Once more men in boats to the wind mills, then they are up in the top and the hurricans still lurk.

4. This commie crap the commie Democrats attempt to reuse, has never worked and never will.

5. They can not “hide their decline”

APACHEWHOKNOWS on December 14, 2012 at 5:11 PM

Wind energy companies have urged Congress for months to extend the so-called production tax credit, which is set to expire this month.

We need to end these wind energy subsidies.

rbj on December 14, 2012 at 5:12 PM

What is the attraction to wind and solar for Obama and the Left? Is it part of their Utopian (Utopia — etymology “No place”) vision? Isn’t that the primary motivation behind funding the wind/solar industry? I see wind turbines up and down I-65 to Chicago in Indiana and they are U G L Y. Butt ugly. I don’t blame Ted Kennedy for not wanting them in Martha’s Vineyard.

Paul-Cincy on December 14, 2012 at 5:13 PM

I don’t blame Ted Kennedy for not wanting them in Martha’s Vineyard.

Paul-Cincy on December 14, 2012 at 5:13 PM

I do, one should never ask someone else to do something that are not willing to do themselves. Ted pushed the “Green Energy” crap on everyone else like his life depended on it, but refused to make a single one of the sacrifices that he demanded that the “Little” people made on his behalf.

SWalker on December 14, 2012 at 5:16 PM

What do you think will happen when it costs $12 to charge your I-Pad once? My guess is, you won’t own (or buy) one.

BobMbx on December 14, 2012 at 5:03 PM

Take it further. You won’t be able to afford any products manufactured in the US as they will have to pay the additional energy costs during the manufacture of their product. That cost has to be passed along to the consumer.

If we think it is cheaper to make products in China now, just wait to see what happens after we triple our energy costs.

weaselyone on December 14, 2012 at 5:18 PM

If we think it is cheaper to make products in China now, just wait to see what happens after we triple our energy costs.

weaselyone on December 14, 2012 at 5:18 PM

Somewhere I read, and it seems plausible, that China is building a new coal-fired power plant every 2 weeks. Obama’s stated public policy is if we build a coal-fired power plant, then he will bankrupt it. We’ve hardly built any new coal-fired plants in years. And hardly any new oil refineries in decades. And not a new nuclear power plant in 30 years. It’s a miracle we still have any power.

Paul-Cincy on December 14, 2012 at 5:23 PM

The current commie Democrat Party is an early stage, but progressing, death cult.

Give them more time to progress at the risk of our lives.

APACHEWHOKNOWS on December 14, 2012 at 5:27 PM

If we think it is cheaper to make products in China now, just wait to see what happens after we triple our energy costs.

weaselyone on December 14, 2012 at 5:18 PM

That is Obama’s plan, global redistribution of wealth. Evil greedy American capitalists have been ruthlessly and unfairly exploiting a unfair amount of the worlds resources and it’s time for the Evil Greedy capitalist Americans to repay the entire world for our past transgressions.

SWalker on December 14, 2012 at 5:28 PM

Reality cannot be BS-ed forever. It will come back to bite you. For reliability [percentage of uptime, dependable output, and timing of output] wind cannot be used for base load. You have to either have a base load capacity independent of wind, or you have to accept that you will have blackouts and unreliable power to the extent that wind power has replaced base load.

Wind power has been sold as replacing baseload which is not possible. Under certain very limited conditions, it can supplement peak load. Within those conditions it makes sense for infrastructure applications.

It has a limited, but not economically efficient, usage in niche applications. If it is not feasible to bring regular power to a site, or if prolonged independent operation if infrastructure goes down is necessary/desirable, or if it is sufficiently worth it to the owner to not be hooked to the grid; then to a specific user the additional cost may be worth it to him. That cost will include battery banks, specialty DC wiring, possibly inverters, and acceptance of reduced local peak loads on the site.

All the above is too close to reality for the Left to take into account. Reality wins in the end.

Put the government subsidized wind industry out of our misery.

Subotai Bahadur

Subotai Bahadur on December 14, 2012 at 5:32 PM

Some folks here in New Hampshire are getting mad at the wind turbines popping up in the central part of the State. Each one is 40 stories tall. That’s longer than a Boeing 747.

http://www.nhwindwatch.org/

And even a “green” group, the Newfound Lake Association, just came out in opposition to a proposed new wind farm that would be visible from that lake.

Keep the popcorn coming.

Del Dolemonte on December 14, 2012 at 5:34 PM

Subotai Bahadur on December 14, 2012 at 5:32 PM

Excellent post… At the end “Physics” and “Economics” will always win no matter how much stupid and ignorant liberals wish otherwise…

mnjg on December 14, 2012 at 5:38 PM

And even a “green” group, the Newfound Lake Association, just came out in opposition to a proposed new wind farm that would be visible from that lake.

Keep the popcorn coming.

Del Dolemonte on December 14, 2012 at 5:34 PM

BWAHAHAHAHAH… Declare their homes eminent domain, demolish their homes, and put god awful windmills where their homes used to be. Karma is a Pelosi…

SWalker on December 14, 2012 at 5:38 PM

Boehner might makes this part of a cliff deal – extend the current tax rates and we’ll extend the windmill subsidies.

platypus on December 14, 2012 at 5:39 PM

Talked to old friends still in SoCal who aren’t yet quite poor enough to get subsidized gas and electric. Their energy costs are indeed, as Obie promised, skyrocketing. The ones who have good sun exposure are making a move to solar panels for their homes. They don’t call it SUNNY California for nothing.

None are considering a big, loud-arse, undependable, bird-killing windmill. / being facetious

marybel on December 14, 2012 at 5:47 PM

What do you think will happen when it costs $12 to charge your I-Pad once? My guess is, you won’t own (or buy) one.

BobMbx on December 14, 2012 at 5:03 PM

Further, as the costs of petro products increases, so does the cost of wind energy. Carbon-fiber blades are made with carbon, after all. All sorts of plastics are used, and all sorts of parts need to be transported, some of them across oceans. Installation of wind farms will be more expensive, because the trucks that carry parts will be more expensive to run, and even the cost of making those trucks will be higher.

Funny how everything in an economy is interrelated.

hawksruleva on December 14, 2012 at 5:54 PM

Addison, TX put about a dozen of those corkscrew-looking wind power things on top of their expensive new water tower last year.

They *never* are on. I don’t know why, but they are *never* spinning. Utterly worthless, and cost taxpayers several thousand dollars each.

Midas on December 14, 2012 at 6:05 PM

The public bought the dazzle and the BS about wind energy. The media brings this subject up front to be the answer when it pads the pockets of politicians. I have yet to see piles of dead birds around these windmills. When the wind stops blowing they stop and electricity cannot be stored like a fuel. Energy talk is like talking about insurance, we all have it in some form or another and all of us are experts about what insurance is the best until we talk to an insurance person and then you find out you don’t know squat.

mixplix on December 14, 2012 at 7:05 PM

Anyone who votes for this crap is either demented or more likely dishonest.

burt on December 14, 2012 at 7:14 PM

South Point on the Big Island of Hawaii is an amazingly windy place. The trade winds blow 70% of the time, and provide consistant 10-30mph winds. Here in Hawaii electricity rates are 3-4x those in Texas. Even with all of these factors beneficial to wind power production, it cannot support itself without government subsidies. The 90′s era wind farm at south point now rots in the salt and sun. The greenies didn’t care enough about the environment to cart away their trash once the subsidies stopped.

Kungfoochimp on December 14, 2012 at 7:43 PM

I lost my pet bird to one of those darn things.

tomas on December 14, 2012 at 7:49 PM

About time.

The wind industry isn’t really an energy industry; it’s a part of the rent-seeking industry.

David Blue on December 14, 2012 at 7:56 PM

But isn’t the wind free? There should be enough profit margin for investment in further expansion without subsidy.

Red Creek on December 14, 2012 at 8:18 PM

Wind energy companies have urged Congress for months to extend the so-called production tax credit, which is set to expire this month.

We need to end these wind energy subsidies.

rbj on December 14, 2012 at 5:12 PM

NEXT we need to get rid of the Ethanol subsidies, especially including the mandate that forces it into our gasoline!!! Ethanol means lower mileage, higher cost, and ENGINE DAMAGE!!!

IT’S TIME TO STOP SHOOTING OURSELVES IN THE FOOT!!!

landlines on December 14, 2012 at 8:18 PM

We’ve already seen that wind energy is a scam… it has already gone sour… in Hawaii.

The companies backing ‘green’ wind power are after the green on a global scale: subsidies, government hand-outs, and then leaving once the cash dries up. They are like a plague of locusts sucking on the cash until the country wises up, and then they go to the next victim until it, too, becomes aware of the fact that wind energy isn’t something to run an economy on. A few places here and there can work, yes, but on a small, limited scale… wind power doesn’t scale up.

The only place solar power scales up is in orbit. Period. You get rid of the atmosphere, get maximum capture and beam it back to earth via microwaves to rectenna farms. That is 1960′s technology and is STILL cheaper than modern day solar energy systems.

Green energy doesn’t scale up. Algae can’t scale as it is an energy recapture system where you will be lucky to recapture 10% of energy normally lost. Note that you must have a preexisting large loss base to justify re-capture and that you can’t run an economy on energy recapture. Biofuels convert, at best, a bit under 10% of the captured solar energy (well that is what plants do, no?) into liquid fuel (ethanol or methanol or bio diesel). You do just as well with solar cells to electricity… a bit better because it is electricity… and that doesn’t scale. To run the US on biofuels you need about 3 Brazils of arable land… there isn’t enough arable land on the planet to turn the US with bio fuels.

Green is a scam. Not just wind. It is just becoming the poster child of the overall scam.

And in a scam the Mark is the last one to ask ‘Who is getting scammed?’

The US taxpayer is the Mark.

The US voter is the Mark.

You are the Mark.

And you had best realize it and start waking up other taxpayers and voters, because we have become the Mark on a lot of things, way beyond Green Energy and far less solvent than Solyndra.

ajacksonian on December 14, 2012 at 8:32 PM

“less than 20,000 involved in the manufacture of parts used in turbines”

So the loss of the wind power industry manufacturing workforce would be the same as those lost from the stop in production of Twinkies. Whoa, that’s some indispensable industrial powerhouse you got there.

metalguy22 on December 14, 2012 at 8:41 PM

Wind mills are good for pumping water up into stock tanks to water livestock far away from the grid. That’s about it. Even natural gas will find it hard to compete with coal and nuke for base load generators.

KW64 on December 14, 2012 at 8:59 PM

Time to start taxing wind power as a source of revenue. The should, of course, be taxed at their generating potential, not on how much they actually generate. After all that is how the wind industry always talks about them.

KenInIL on December 14, 2012 at 10:29 PM

…screw it!

KOOLAID2 on December 14, 2012 at 10:33 PM

Here in Texas, wind farms were given their genesis by Governor GWB. Not some crazy Washington lib-Dems or some Federal regulation. Nope.

I do not believe the wind industry is viable long term. I do believe the wind industry will continue to get funding under the Obama Administration. Philosophy and appearance will trump economic reality. Hell, the theory got him reelected, so, why not?

JoeinTX on December 15, 2012 at 12:14 AM

These wind generators breakdown faster than a Volt

pat on December 15, 2012 at 12:57 AM

I dislike that the turbines are bird-mincers. That could be dismissed as sentiment if they were economically efficient, but they’re not.

David Blue on December 15, 2012 at 3:02 AM

Fred 2 on December 14, 2012 at 5:05 PM

Yes it has. But even more so, lack of demand has reduced the cost of energy. Just as with money (inflation is low despite the unlimited money creation) businesses are not growing. Manufacturing is moribund. There is no demand for money or for energy so their costs are falling.

MJBrutus on December 15, 2012 at 7:17 AM

Addison, TX put about a dozen of those corkscrew-looking wind power things on top of their expensive new water tower last year.

They *never* are on. I don’t know why, but they are *never* spinning. Utterly worthless, and cost taxpayers several thousand dollars each.

Midas on December 14, 2012 at 6:05 PM

Back in the nineties, I worked for TXU. They had put three turbines out at North Lake in Irving. The engineers told me that maintenance cost regularly exceeded revenue on those units.

We need to end all subsidies. If you can’t stay in business without government assistance, be it a Wind Farm or a family farm, then you shouldn’t be in that business and should look for another line of work.

Odysseus on December 15, 2012 at 7:48 AM

MSNBC generates category 5 hurricane force winds.

racquetballer on December 15, 2012 at 7:48 AM

I’ve always thought wind industry should have concentrated on smaller home sized point of use setups. augment the grid at the endpoint.
they cannot power the grid, for every MW wind generates there needs to be a MW on standby at a baseload supplier to make up for the wind dropping off.
about the only use I could see for the behemoths is to be used to refill the reservoir for pumped storage system.

dmacleo on December 15, 2012 at 11:18 AM

STOP THE MADNESS…..wind power only works (some of the time) for sail boats……..

nonstopca on December 15, 2012 at 12:14 PM

At the end the Physics and Economics will always win not matter how much liberals wish otherwise…

mnjg on December 14, 2012 at 5:01 PM

Absolutely true. Unfortunately, as shown by the USSR, China other countries, you can wait a lifetime for that “win”. For the liberals, it’s always just give us a few more of your dollars and then we’ll prove it…

Over50 on December 15, 2012 at 12:35 PM

No worries this will all blow over time.

jake49 on December 15, 2012 at 2:26 PM

Wind power won’t be feasible unless the price of carbon-based energy sources go way up.

Paul-Cincy on December 14, 2012 at 4:56 PM

Raising the price of carbon-based energy sources will increase the cost of manufacturing windmills. They will still need their subsidies.

agmartin on December 15, 2012 at 2:45 PM

In reality – they Never should have gotten OUT of “panic mode“…

williamg on December 15, 2012 at 3:31 PM

But isn’t the wind free? There should be enough profit margin for investment in further expansion without subsidy.

Red Creek on December 14, 2012 at 8:18 PM

It’s as free as the plan to manufacture energy using the spells from Magical Fairies……..we’re spending the most money FINDING the magical fairies….

williamg on December 15, 2012 at 3:34 PM

This practice of the government picking winners and losers…

Get real. The government only picks losers.

Wine_N_Dine on December 15, 2012 at 6:36 PM

I’ll bet if they painted erotic pics on the blades they could put one in Fenway Park without a Boston liberal murmuring.

Don L on December 16, 2012 at 7:51 AM

As long as tax money is used to subsidies the cost of wind energy they will never find a cheaper method of production. The government stifles innovation because it will continue to subsidies poor methods of production. Why invest several million dollars in finding methods to improve production and cut cost too if the Government is going to help make up your loses. The subsidies will never go away, tax payers have been subsidizing the price of milk for the last fifty years and no end in site.

old war horse on December 17, 2012 at 9:07 AM