Secretary Chu: We Can Win Clean Energy Battle - Seven trillion dollars are at stake in the global battle to win market share in renewable energy and the United States can win that battle, U.S. Secretary of Energy Steven Chu said during stops in Colorado.
Let's see, Secretary Chu is touring a GE facility. Would that be the same GE that paid no corporate income tax?
Secretary Chu insists America must invest federal money into the renewable energy market for it to work. Only thing is, federal money is taken from the taxpayers effectively by coercion so it can be invested in plants such as GE's so they can avoid income taxes, Solyndra and Beacon (both of which went bankrupt), and Evergreen which moved its operations to China where they can dump the toxic chemicals (from making solar PV cells) out on the ground. When money is taken from taxpayers, they have less money to buy the things they need and want which decreases demand which is bad for the economy. When money is taken from taxpayer businesses, they have less money to grow their business and hire additional employees. The people left without jobs have to fall back on government assistance to eat and house themselves meaning more money has to come from taxpayers who are still employed or be borrowed from other countries thereby digging us deeper into debt.
Only in America would people with a "progressive" mindset compare tax deductions the oil industry gets to production-tax-credits and cash-in-lieu grants by labeling them both subsidies. See politicians call a reduction in the growth of spending a spending cut whereas the poor sap taxpayers have to do cutout spending onsomething they actually want or need to achieve a spending cut.
Let's address Secretary Chu's statement that wind energy is now cost competitive with fossil fuels at 5.5 cents per KWh ($55/MWh). No, it is not for a couple of reasons. Natural gas is presently around $4 per million BTU. The market heat rate in ERCOT is about 8,000BTU/KWh (gas based equivalent) making the fuel cost about $32/MWh. Capital costs run about $0.6/MWh based on a CCGT plant having a 20 year life. O&M adds maybe another $0.5/MWh. That yields and around the clock power price of about $33.10/MWh. When wind is most available, between about 11PM and 6AM, ERCOT power prices are routinely in the $25 to $26/MWh range. So, no--wind is not economically competitive with fossil power.
If America wants to be competitive in the global renewable energy market, then we need to restructure our corporate tax system. To do that, we need to cut spending on stuff that does not compete economically. We also need to restructure our regulatory systems to eliminate onerous requirements that do not have any benefit or perhaps may even be harmful to competitiveness.
Secretary Chu just does not have a clue.
However, if fossil fuel is competitive without subsidies, why is it subsidized? If we removed those subsidies, perhaps we could reduce or eliminate the subsidies offered to renewable generation. This would save the treasury even more money that we continue borrowing from the future to pay for today.
While there are times when the wind farms are making power during the day, there are also times when there is no significant wind production for a calendar day or two or three.
The "subsidies" for oil and gas are by and large deductions from income, much like any business has deductions for expenses and depreciation. The price of oil is too high right now for the O&G firms to make use of any of the production tax credits for marginal wells and enhanced extraction. DoE is not giving O&G producers production tax credits or cash grants. The developers and owners of CCGT or super-critical coal plants do not get PTCs or cash grants.
Dry up the PTCs and cash grants and see just how fast wind farm construction comes to a stop--it is not reliable and its variability requires that there be back up power and a considerable amount of conventional or nuclear generation on line to control frequency and power factor.
Regardless, the market would operate more efficiently without government massive government intervention. It's my preference that the pervasive subsidies offered to O&G through our tax code be eliminated before we increase taxes on more sustainable fuel sources.
Note that I strongly agree with you that CCS is a waste -- another taxpayer subsidy of an industry. Government (citizens) should pick outcomes, not means. However, in contrast, I disagree about nuclear -- it's simply nowhere near cost effective without massive taxpayer support.