GAO report: The govt has gotten a little heavy-handed with these wind subsidies, huh?
posted at 8:41 pm on April 8, 2013 by Erika Johnsen
The wind lobby’s do-or-die attitude in the run-up to the fiscal cliff last year was a very telling moment for the industry: Without the highly generous production tax credit and other subsidies they receive courtesy of the federal government (and by that, I of course mean taxpayers), no way can they possibly sustain the pace at which they’ve become accustomed to running — and boy, do they know it.
They managed to sneak through their all-important PTC just under the fiscal-cliff wire, and in an added bonus, the IRS magnanimously decided to up the value of credit still further to account for inflation last week. Even better, the GAO has a new report out detailing the many instances of overlap when it comes to federal wind initiatives, all of which together help to divert billions of taxpayer dollars every year:
The Government Accountability Office recently identified 82 federal wind-related initiatives implemented by nine agencies in fiscal year 2011. The nearly seven dozen initiatives were fragmented across agencies and had overlapping characteristics, and several that financed deployment of wind facilities provided some duplicative financial support, the report found.
Sixty-eight of the 82 programs overlapped with at least one other initiative “because of shared characteristics,” the 95-page report found. The five agencies that had the most initiatives, and therefore were looked at closest, were the Departments of Energy, the Interior, Agriculture, Commerce and Treasury. Those five departments collectively implemented 73 of the 82 proposals examined by the GAO. …
According to an April 3 notice in the Federal Register, wind, geothermal and “closed-loop” biomass projects will now get 2.3 cents per kilowatt-hour of electricity produced, up from 2.2 cents.
As I’ve argued before, I have nothing at all against green energy in theory, as long as it’s something consumers actually want to buy — and the Obama administration just doesn’t seem to want to give them that chance. It’s always easy to throw money around and send the town criers out to trumpet about how much you really, truly care about perceived planetary wellness, but in terms of substantive long-term solutions, the federal government is actually doing green energy a huge disservice with all of these perpetually increasing perma-subsidies.
Flooding the industry with cash and cronyism is hardly a way to encourage price efficiency, and encourages rent-seeking rather than merit-based competition. And hey, check it out — that’s something even a rationally self-interested green-energy executive can get behind:
Government subsidies to new wind farms have only made the industry less focused on reducing costs. In turn, the industry produces a product that isn’t as efficient or cheap as it might be if we focused less on working the political system and more on research and development. After the 2009 subsidy became available, wind farms were increasingly built in less-windy locations, according to the Department of Energy’s “2011 Wind Technologies Market Report.” The average wind-power project built in 2011 was located in an area with wind conditions 16% worse than those of the average project in 1998-99.
The Department of Energy admits that this trend is due at least in part to the 2009 federal subsidy: Because the grants that companies receive aren’t based on how much power they produce, “it is possible that developers have seized this limited opportunity to build out the less-energetic sites.” Meanwhile, wind-power prices have increased to an average $54 per megawatt-hour, compared with $37 in 2005.
… Yet as long as these subsidies and tax credits exist, clean-energy executives will likely spend most of their time pursuing advanced legal and accounting methods rather than investing in studies, innovation, new transmission technology and turbine development.
Breaking on Hot Air