On May 24, President Barack Obama visited wind turbine blade manufacturer TPI Composites in Newton, Iowa. While there, he announced that his “to do list” for Congress included extending the wind energy’s Production Tax Credit.
The credit, which expires at the end of 2012, gives 2.2 cents per kilowatt hour to wind energy producers. For all of 2012, U.S. wind farms are expected to provide about 3.5 percent of U.S. electric power, or 145 billion kwh, making wind producers eligible for $3 billion in tax credit subsidies.
On May 30, Republican candidate Mitt Romney took up the Iowa challenge to his energy policies. His campaign told the Des Moines Register that Romney “will allow the wind credit to expire in 2012, end the stimulus boondoggles and create a level playing field on which all sources of energy can compete on their merits.”
Through 2011, the wind industry had the option of a 30 percent investment tax credit that could be received as up-front cash grants, instead of having to wait until power was generated for the tax credit. Of the most recent $1 billion in wind energy grants handed out by the government, 85 percent — $849 million — has gone to foreign wind turbine companies, such as Germany’s Siemens, Spain’s Gamesa, India’s Suzlon and Denmark’s Vestas. Spanish utility company Iberdrola S.A. alone has collected $545 million in recent years through its U.S. subsidiary. Subsidy data from the U.S. Energy Information Administration shows that on a per-unit-of-energy-produced basis, oil and gas producers receive 28 cents; nuclear receives $1.79; biofuels got $20.37 and wind got $32.59.
The head of Vestas, the world’s biggest wind turbine maker, has said the U.S. wind turbine market is likely to fall by 80 percent next year if the tax credit expires. Vestas also warned that failure to extend the credit could force it to cut 1,600 U.S. jobs. By contrast, a study by energy, mining and metals consultant Wood MacKenzie reports that new U.S. oil and gas production could create an additional one million U.S. jobs by 2018.
Spain has aggressively subsidized wind and solar energy as a job creator. But a study by King Carlos University shows that for each new wind energy job, Spain loses 2.2 jobs in energy-consuming industries because of higher power costs.
During 2012 to date, our nation’s 50,000 MW of wind capacity is producing an intermittent and unpredictable 29 percent of that capacity. Wind blows just part of the time, needing backup from natural gas plants. This is a reason wind energy needs subsidies.
Britain is a world leader in wind, with a subsidized program to take advantage of the windiest conditions in Europe. But its program continues to fail. Figures released in early January showed that as temperatures plunged to well below freezing and electric power demand soared, electricity production at Britain’s 3,100 wind turbines fell from an average of 8.6 percent of Britain’s electricity mix to just 1.8 percent.
As Jeremy Nicholson, director of the U.K. Energy Intensive Users Group, said, “What is worrying is that these sorts of figures are not a one-off.
It was exactly the same last January and February when high pressure brought freezing cold temperatures, snow and no wind.”
Nicholson added, “We can cope at the moment because there is still not that much power generated by wind. What happens when we are dependent on wind turbines for more of our power, and there is suddenly a period when the wind does not blow and there is high demand?”
A better approach is to continue research such as the consortium of wind energy researchers led by the University of Minnesota which will receive $7.9 million from the U.S. Department of Energy for fostering wind energy development in the U.S.
Queen Elizabeth’s husband, the Duke of Edinburgh, summed up the issues with Britain’s wind program, describing wind supporters as people who “believe in fairy tales.”
Romney has this one right. It’s time for “all sources of energy to compete on their own merits.”
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