The US government has not justified its financial support of wind energy and that failure could lead to unnecessary federal spending to boost the wind industry, the Government Accountability Office said Thursday.
“Federal support in excess of what is needed to induce projects to be built could instead be used to induce other projects to be built or simply withheld, thereby reducing federal expenditures,” GAO said in a report. “In the current fiscally constrained environment, effective allocation of resources is especially important.”
GAO said that despite the fact that the departments of Energy and Agriculture acknowldged the should assess a project’s need for financing when deciding whether to award funding, neither agency documented that was done.
The Treasury Department, on the other hand, does not consider need, only eligibility, when awarding tax credits for wind projects. While GAO identified 82 different federal initiatives across nine different agencies to support wind power, Treasury tax credits accounted for 93% of the $2.9 billion in federal support for wind power in 2011, the year GAO examined.
Treasury-provided a cash-in-lieu of tax credits program under the 2009 American Recovery and Reinvestment Act, and offers a production tax credit for wind power projects that commence construction before the end of 2013.
In a response to GAO included in the report, DOE said it would continue to bar its loan guarantee recipients from receiving other federal funds, and formally document its assessment of the applicant’s financial need.
DOE has about $3.5 billion in loan guarantee authority remaining that could go to wind-related projects. But the agency has not issued a loan guarantee since controversy erupted over failed solar-panel manufacturer Solyndra in 2011. The company received a $550 million loan guarantee, but shut down operations that year after filing for bankruptcy.
As a policy, DOE does not discuss current loan-guarantee applications, but has said it is considering a loan guarantee for the $2.6 billion Cape Wind offshore wind project in Massachusetts. DOE has not said how much it is considering providing the project.
Under the Recovery Act, DOE awarded about $1.5 billion in loan guarantees to wind-related projects.
DOE also provides other wind-power related grants, including research and development funding.
GAO said that of the nine agencies and 82 initiatives that provide support for wind, only half were formally coordinated, and among the others there was fragmentation, overlap and some duplicative financial support.
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