Stop Government Subsidies for Wind Turbines

Government subsidies for wind energy include Direct Expenditures, Research and Development, Loans and Guarantees and Tax Exemptions, ref. 1.

Direct Expenditures involve direct cash outlays which are provided to energy producers. During FY 2010 $3.5 billion was expended to support wind programs. The Lake Erie Development Corp. in Cleveland, OH was awarded a $4 million federal grant by the DOE, ref. 2, in December 2012. The nonprofit company is working to build wind turbines off the shore of Lake Erie.

Research and Development  (R&D) expenditures are aimed at improving future energy production. During FY 2010 $166 million was expended to support wind energy R&D. The DOE wind energy program funding  request for FY 2013 is $95 million, ref. 3. Total DOE R&D expenditures for wind will exceed $500 million from FY2009 to the end of FY 2013.

Loans ans Loan Guarantees involve federal financial support for certain energy technologies including wind. During FY 2010 $85 million in loan guarantees were awarded by the DOE. During FY 2011 about $1.3 billion of the $1.43 billion of guarantees for wind went to the Caithren Shepards Flat Project. This onshore wind energy project, located in eastern Oregon, has a total rated power of 845 MW, and will only provide 35 permanent jobs. The maximum energy produced, at rated power, is 7.4 million MWhrs. The actual energy produced is only 1.8 million MWhrs, because of low average wind speeds at the site. In other words the wind turbine farm operates at rated power for only 88 days out of the 365 days each year. In contrast our nuclear electric plants are operating on an average of 325 days each year.

Tax Expenditures allow a reduction in the tax liability of firms that affect energy production. During FY 2010 $1.2 billion in tax expenditures was given to wind energy producers. Our government provides a tax credit to wind turbine investment companies of 2.2 cents per kWhr of electricity produced. For the 1.8 million kWhrs of electricity produced, each year at the Oregon wind farm, the investing company receives a $39.6 million tax credit.  An income tax credit can be viewed as a loss of tax revenue to the U.S. Treasury.

As mention earlier, the wind farm has created 35 permanent jobs. We tax payers are spending over $1.1 million per year for each employee at this wind farm just based on their tax credit of $39.6 million. How much longer can we afford to pay this exorbitant salary just to create clean energy jobs that provide an unreliable, and a costly source of electricity?

Congress extended, from 2012 into 2013, the 2.2 cents per kWhr tax credit for wind turbines producing electricity, ref. 4. The extension is part of the “fiscal cliff” legislation that was passed in early January 2013. It is estimated that the Treasury will experience over $2 billion in lost revenue in 2013 as a result of the extension.

Conclusions

In FY 2010 wind turbines generated a paltry 2.3% of the total electric energy consumed in the U.S.  An interesting example of the energy cost to taxpayers is revealed when the dollar amount of subsidies is divided by the energy produced. For wind turbines the cost to taxpayers is $56 per MW-hr produced. The cost to taxpayers is only $3 per MW-hr produced for our nuclear electric industry. For more details on government subsidies for energy production, see “Solar Energy”, Sept. 26, 2012, on this website.  We can reduce federal spending by several billions of dollars this year by eliminating subsidies for wind turbines. Are you concerned about this administrations’ uncontrolled spending? Do you believe we should reduce government spending?  If your answer is “yes”, please contact your U.S. Representatives and request that government subsidies for wind turbines be terminated.

References

1. “Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2010″, U.S. Energy Information Administration, Department of Energy, Washington, DC, July 2011.

2. Murray, T.D. & Funk, J. “LEEDCo gets $4 million federal grant for wind energy project on Lake Erie”, The Plain Dealer, Dec. 13, 2012.

3. “Department of Energy FY 2013 Congressional Budget Request”, DOE/CF-0077 Volume 3, February 2012.

4. Hull, Dana, “Wind generation retains tax break”, San Jose Mercury News, published by: The Plain Dealer, Cleveland, OH, Jan. 4, 2013.