Rep. Noem Spearheads Bipartisan Letter to Leadership on PTC for Wind Energy - Rep. Kristi Noem was joined by 18 House freshman in sending a bipartisan letter to Speaker John Boehner, Leader Eric Cantor and Whip Kevin McCarthy today, urging them to bring an extension of the Production Tax Credit (PTC) for wind energy to the House floor as soon as possible.
The continuation of PTCs represents a reverse Robin Hood with major impacts on the economy. First, quit comparing wind and solar generation to the oil and gas industry. Wind and solar compete--very poorly--with other generators--fossil, nuclear, hydro, geothermal. PTCs, RPSs, cash grants, and carbon taxes are the only way wind and solar become economical. But the bill concerns PTCs for wind so I will concentrate my comment on that.
Wind generators in the US typically produce the bulk of their power between sometime around midnight and six in the morning. In the best locations, their capacity factor is about 32% and not by choice. At roughly $2,000/nameplate peak KW just the raw capital cost keeps the price of electricity from wind power at about $35/MWh without even considering the cost of operations & maintenance, the cost of long distance transmission lines, the cost of building backup fossil generating facilities etc. Because they run when the regional electricity load is at or near base load, they interfere with operation of the lowest cost power sources which can make power in the $20/MWh range.
The PTC gives a wind generator $22/MWh credit against his income tax bill after he has depreciated his capital investment (at a highly advanced rate), expensed his O&M and all the other costs associated with doing business. A fossil-fueled generating facility does not get a tax credit nor does he get to utilize accelerated depreciation. In order to have to owe $22 in income tax, he needs to have a profit of about $62.86 at the corporate tax rate of 35%. At profit rate of about 8% typical of the industry, he needs to have expenses of $722.89. Granted, part of his expenses is depreciation of his capital cost. If he is a modern coal fired plant, that depreciation expense would be about $165/KW-yr or roughly $20 per MWh. The rest of the expenditure is fuel, wages, contractor costs, property taxes, material costs for repair parts--all things that create and maintain long term employment. These costs in turn generate individual and corporate income taxes for federal, state, and some local governments in addition to sales taxes for state and local governments.
Wind energy does not make significant impact on overall CO2 emissions. By the way one has to admire the way that ardent green proponents have managed to mold all the news media into calling CO2 a pollutant. CO2 is an essential element of life on Earth. All animal life breathes oxygen and emits CO2 while green plants breathe CO2 and emit oxygen while retaining the carbon as part of their structure. Regardless, read some of the studies out of Europe and you will find that wind has not made the dramatic impact on CO2 emissions touted by AWEA and other proponents.
Lastly, look at who is getting the PTCs. You will find they are major corporations with large tax bills and some of whom have huge profit margins. This should disillusion you that they are investing in green energy for altruistic reasons.
So, PTCs take taxpayer money from everyone not involved in green energy and give it to a bunch of large corporations who are profitable in order to reduce the income tax they pay while simultaneously destroying far more jobs in the fossil fuel generating industry and their suppliers and contractors meaning less income tax going to the federal government, state government and local government, fewer sales taxes to state and local governments, and fewer property taxes to state and local governments.
Providing PTCs to make uneconomical wind farm economical at the price of our economy is STUPID policy. Passing RPS or RESs to mandate the use of renewables at the price of our economy is stupid policy. Mandating carbon credits at the price of our economy is stupid. By the way, has anyone heard of China, India, Vietnam, etc having carbon taxes? Why would we saddle our declining economy, part of which decline is resulting from low cost global competition from countries that manipulate their currency, with added costs that do not accomplish anything?
What keeps power costs down is building new plants that are more efficient and which by the sheer definition of efficiency emit less CO2/MWh generated.