GOP: It’s probably about time to look into this dodgy wind-credit business

posted at 3:21 pm on February 13, 2013 by Erika Johnsen

To follow on the heels of Ed’s SOTU fact-check, President Obama pedaled yet another deliberately misleading fact last night that happens to be a mega-pet peeve of mine (emphasis added):

We have doubled the distance our cars will go on a gallon of gas and the amount of renewable energy we generate from sources like wind and solar, with tens of thousands of good, American jobs to show for it. We produce more natural gas than ever before, and nearly everyone’s energy bill is lower because of it. And over the last four years, our emissions of the dangerous carbon pollution that threatens our planet have actually fallen. But for the sake of our children and our future, we must do more to combat climate change. …

Now, four years ago, other countries dominated the clean-energy market and the jobs that came with it. And we’ve begun to change that. Last year, wind energy added nearly half of all new power capacity in America. So let’s generate even more. Solar energy gets cheaper by the year. Let’s drive down costs even further. As long as countries like China keep going all-in on clean energy, so must we.

Why yes, the wind industry did boast a good chunk of new power capacity in 2012 — sounds awesome! Wind must be doing pretty well, right? …Except that everyone in the wind industry was afraid they were going to lose the highly generous wind production tax credit on which they are shamefully dependent, and were rushing around like chickens with their heads cut off to get their projects started so they could get grandfathered in to the credit’s benefits. As the NYT reported at the close of last year:

All over the country, developers are in a sprint to get new wind farms up and running before Tuesday, when two subsidies will disappear like Cinderella’s ball gown. After that, the nation’s wind-farm building will be at a virtual standstill.

The stakes of meeting the deadline are enormous. Wind turbines that are connected to the grid and in commercial service before midnight on New Year’s Eve are entitled to a 2.2 cent tax credit for each kilowatt-hour they generate in their first 10 years, which comes out to about $1 million for a big turbine. Or companies can request a lump-sum payment equal to 30 percent of the construction cost.

As it stands now, those that enter service on Jan. 1 or later are out of luck.

But the lavish credit did get extended, in the form of a one-year extension added in to the last-minute fiscal-cliff package — although the language on exactly what stages of wind projects will qualify was rather squishy, as the House GOP hasn’t failed to notice. Via The Hill:

Congress, with a strong push from the White House, extended the credit for one year in the January deal to avoid the “fiscal cliff.” The renewal included an alteration that allowed wind projects to collect the credit if developers commence construction by 2014, rather than turbines beginning to produce power by that deadline. …

“There’s no clarification yet as to what under construction means … We are going to look at that as a committee because that is undefined area that in the hands of a regulator and we want to be sure we bring some clarity to that,” said Lankford, who chairs the House Oversight and Government Reform Committee’s Energy Policy, Health Care and Entitlements Subcommittee.

The Treasury Department and IRS are currently evaluating how to interpret the credit’s language. Some experts say the threshold for beginning construction is when developers invest 5 percent of the project cost, while others say physical activities must be under way.

Some conservative lawmakers say the tweak will expand the program and the federal deficit, noting the one-year extension would cost $12.1 billion through 10 years.

And what is it that we are meant to spend $12.1 billion on? One of the most expensive and unreliable forms of electricity available, that’s what. From Real Clear Energy:

Bloomberg New Energy Finance has released its annual volume, Sustainable Energy Factbook, published January 31. Included is the chart above, which compares the levelized costs for 24 different technologies for generating electricity. …

What drives up the levelized cost of wind and solar is their low capacity factor, generally around 20 percent for solar and 30 percent for wind. Despite their “nameplate capacity” – the figure usually quoted in the press – wind and solar facilities are usually generating electricity only 20 to 30 percent of the time. This increases their levelized costs by a factor of 3 to 5 times. Capacity factor also affects large and small hydro, since many dams must be operated on a seasonal basis due to rainfall patterns and fish migrations.


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Time to tilt at some windmills…

Drained Brain on February 13, 2013 at 3:26 PM

wind and ethanol..no more subsidies. Let them operate under the same rules the oil companies do.

DanMan on February 13, 2013 at 3:29 PM

This is the one single time I agree with Ted Kennedy, who didn’t want a wind farm off of Martha’s Vineyard because, frankly, they’re ugly. We’ve got them all along I-65 between Indianapolis and Chicago. Talk about ruining the appearance of the Great Plains. Is it worth it? I mean, even if it was worth it. Which it clearly is not.

Paul-Cincy on February 13, 2013 at 3:30 PM

So, Repubs are for breaking Big Wind, and Dems are for passing Big Wind.

Christien on February 13, 2013 at 3:32 PM

Yeah, right after you spineless tools look into giving young people something besides a lifetime of part-time drudgery to look forward to, thanks to Democrat policies. I think I can hear the Democrats snickering already.

MelonCollie on February 13, 2013 at 3:33 PM

This is the one single time I agree with Ted Kennedy, who didn’t want a wind farm off of Martha’s Vineyard because, frankly, they’re ugly. We’ve got them all along I-65 between Indianapolis and Chicago. Talk about ruining the appearance of the Great Plains. Is it worth it? I mean, even if it was worth it. Which it clearly is not.

Paul-Cincy on February 13, 2013 at 3:30 PM

Here in New Hampshire the Leftist hypocrisy on energy is unbelievable.

They all have happily supported a new wind farm that went on line last month; this has 24 towers along mountain ridgetops less than a mile from not only the White Mountain National Forest, but also less than a mile from one of the only Peregrine Falcon nesting sites in the entire state.

Each of these wind towers is 40 stories tall (400 feet), and the lines feeding the “power” they generate into the power grid are strung on towers that are twice as tall as the existing power line poles.

On their planet, these 40-story tall behemoths are “good”. But they are all bitterly opposed to a proposed project to bring dirt-cheap hydro electricity from Quebec down to New Hampshire-because the towers will be 1/4 as tall as their pet wind towers.

They are all whining “Bury the transmission lines from Quebec!”, but are totally ignorant to how much that would cost. At the same time, they have absolutely no problem with the transmission lines from their windmills being above ground, twice as high above the ground as the existing ones.

Genetic.

Del Dolemonte on February 13, 2013 at 3:45 PM

Thanks to ‘baseline budgeting’, spending cuts are really only a slight decrease in the increase in spending…

… Government will always grow and spending will continue until it collapses and freedom and liberty will be extinguished.

Paradise is just around the corner…

Seven Percent Solution on February 13, 2013 at 3:48 PM

Del Dolemonte on February 13, 2013 at 3:45 PM

Damn Del, you beat me to it.

D-fusit on February 13, 2013 at 3:50 PM

Too bad there is no Lorax to speak for the birds.

Fallon on February 13, 2013 at 3:57 PM

We’re going to hell in a hand-basket… Wind energy costs 300% to 400% more than natural gas energy (see chart above). At the same time the U.S. Gov’t is GIVING private equity companies 30% of the cost to build wind farms (vis-a-vis the Production Tax Credit), while States MANDATE utility customers (you and me) buy this wind energy at a huge cost that locks in 11% profits for these private equity companies (vis-a-vis Renewable Portfolio Standards). OMG. This is centralized planning, price controls, and crony capitalism all wrapped up into one stupid package.

RedManBlueState on February 13, 2013 at 4:02 PM

Del Dolemonte on February 13, 2013 at 3:45 PM

Damn Del, you beat me to it.

D-fusit on February 13, 2013 at 3:50 PM

Some factoids I left out:

1. The folks in central NH get to look at those 40 story wind towers, but they get absolutely none of the electricity. It all goes to Teddy Kennedy’s state.

2. The project was built in a poor town that does not even have Zoning. They rammed it right through by promising the town fathers that the wind farm would pay the entire town budget for a whole year, each and every year. The town has yet to see any of that money.

3. The residents of the town where the Peregrine Falcon nesting site is located bitterly opposed the project, but the Democrat Activist Justices at the NH Supreme Court would not even grant them a hearing. They now get to enjoy the sight of 24 40-story towers looming directly above their heads, but nothing more.

Del Dolemonte on February 13, 2013 at 4:07 PM

On their planet, these 40-story tall behemoths are “good”. But they are all bitterly opposed to a proposed project to bring dirt-cheap hydro electricity from Quebec down to New Hampshire-because the towers will be 1/4 as tall as their pet wind towers.

They are all whining “Bury the transmission lines from Quebec!”, but are totally ignorant to how much that would cost. At the same time, they have absolutely no problem with the transmission lines from their windmills being above ground, twice as high above the ground as the existing ones.

Genetic.

Del Dolemonte on February 13, 2013 at 3:45 PM

Interesting. When EXISTING Hydro becomes the enemy, you know someone has gone over the edge.
They are just afraid of the how bad the lower cost energy will make their windmills look. Can’t have any competition.

Jabberwock on February 13, 2013 at 4:08 PM

Yeah, right after you spineless tools look into giving young people something besides a lifetime of part-time drudgery to look forward to, thanks to Democrat policies. I think I can hear the Democrats snickering already.

MelonCollie on February 13, 2013 at 3:33 PM

IMO, Congressional Dems and Repubs couldn’t care less about you kids, despite all their sales pitches. They should all be fired with cause by voters every election and should earn less than the minimum wage.

Christien on February 13, 2013 at 4:37 PM