The Institute for Energy Research has released a white paper examining the numerous flaws with the federal wind Production Tax Credit (PTC). The paper, “The Case Against the Wind Production Tax Credit”, comes as Congress considers a retroactive extension of the PTC as part of a broader tax extenders package. Key findings include:
- The PTC is costly. A two-year extension will cost $13.35 billion, which is enough to pay 124 million Americans’ monthly electricity bills.
- The PTC encourages “cannibal behavior.” It allows wind producers to pay the grid to take their power and still profit. This “negative pricing” contributed to premature retirements of Dominion’s Kewaunee Nuclear Plant and Entergy’s Vermont Yankee Nuclear Plant.
- Americans oppose the PTC. A survey by the American Energy Alliance finds that 65 percent of voters believe two decades worth of tax credits for the wind industry is long enough.
- The PTC threatens grid reliability. Wind typically produces the most power when it is needed least: one study finds that “over 84 percent of the installed wind generation infrastructure fails to produce electricity when electric demand is greatest.”
- Wind energy is expensive. When all factors are considered, wind energy costs $109 per MWh, which is twice as much as this year’s average wholesale electricity price of $54 per MWh.
Congress enacted the PTC in 1992 as a temporary measure for an “infant” industry. After propping up the wind industry for more than two decades, the PTC has clearly outlived its usefulness. As the IER analysis shows, the costs of the wind PTC vastly outweigh the supposed benefits. It is time for Congress to prioritize the American people over wind industry lobbyists.
Along with this report, the IER’s political action arm, the American Energy Alliance, has launched an initiative to engage lawmakers in nine states – Kentucky, Ohio, West Virginia, Wisconsin, Texas, North Carolina, Utah, California, and Louisiana – to reject attempts to revive the wind PTC – “a decades-old subsidy that props up the wind industry and lines the pockets of wealthy investors at the expense of the American taxpayer”.
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