WASHINGTON – Subsidies for wind power, due to expire at the end of 2012, are setting off a gusty battle in a Congress that’s desperately looking for ways to cut budget deficits.
A bill to extend the subsidies through 2016, championed by a Washington state Republican, Rep. Dave Reichert, is sowing division within his own party.
Opponents say it’s time for the federal government to stop subsidizing all energy projects and to let the marketplace decide which ones succeed.
“This bill isn’t about picking winners or losers,” he said. “This bill is about giving America every opportunity we can give those businesses out there to innovate and to surge ahead in this race for the next new energy.”
It’s “a big issue for the country” and for his state, he said, which was an early leader in the industry but now ranks fifth in wind-power installation, behind Texas, Iowa, California and Minnesota.
At a Nebraska Wind Power conference this week in Kearney, speakers urged the state to play catch-up, especially by building transmission infrastructure. Nebraska’s breezy plains make it No. 4 in the country for wind power potential, but its development lags far behind the leading states.
In Reichert’s Washington state, demand for alternative energy projects is growing especially because voters decided in 2006 to require utilities to get at least 15 percent of their electricity from renewable sources by 2020.
Supporters of the federal tax benefits say that failure to extend them would quickly slow down wind projects. But many predict the industry faces much tougher scrutiny and more resistance on Capitol Hill this time around.
Opponents have stepped up their criticism of the wind subsidies since news broke that the Energy Department gave preferential treatment to Solyndra, a California solar company that collapsed after winning a federal loan guarantee.
“The Solyndra scandal has demonstrated the danger of government interference in energy markets,” said Rep. Mike Pompeo, R-Kan., who is leading the effort to end the subsidies.
In Washington state, some are saying wind power is overdeveloped, thanks to the market-distorting effect of the subsidies. They note the Bonneville Power Administration, a federal agency that oversees power needs in the Pacific Northwest, this spring cut off wind generation for two months when a surge in river flows resulted in an oversupply of hydropower.
“It is legitimate to explore at what point in the development of any industry . the subsidies should be reduced or withdrawn,” said Chris Gleason, community and media services manager for Tacoma Public Utilities. The wind industry, he argued, “is no longer in its infancy” and in fact is overbuilt in the Northwest.
Wind power supporters say the out-of-whack supply and demand this year is a temporary situation that can be worked out, not a reason to end subsidies to the industry.
“The substance of the situation is: Does this say anything about the need for wind energy? And we would say that it doesn’t,” said Peter Kelley, of the American Wind Energy Association. “It’s a short-term bottleneck.”
Reichert called the wind power tax credits “job creators” across the nation. Their bill would extend by four years the credits for wind power, hydropower, geothermal and other forms of renewable energy.
The wind subsidies – which alone will cost an estimated $900 million a year in 2011 and 2012 – are worth it, supporters say, because they spur $17 billion a year in private investment.
In the past six years, U.S. production of wind-turbine components has grown 12-fold and now includes more than 400 facilities in 43 states, according to the American Wind Energy Association. It said the industry now supports 75,000 jobs nationwide and estimated that could grow to 500,000 in the next two decades.
On the other side, Pompeo said his bill would save up to $90 billion in 10 years by ending subsidies. He wrote fellow lawmakers, saying Congress must correct “decades of taxpayer-funded handouts to industries” that can survive on their own.
“Wind, solar, biomass and other sources of energy all have shown great promise, but it is high time for energy sources to demonstrate their value on the open market,” he said.
World-Herald staff writer Erin Golden contributed to this report.