With the fiscal cliff looming, countless interests are competing to ensure their federal support is not thrown onto the chopping block, and the wind energy industry is no exception: With the production tax credit (PTC) set to expire in less than two weeks, the American Wind Energy Association (AWEA) and other industry advocates are stepping up their efforts to save the critical tax incentive.
Despite pushing for an immediate one-year PTC extension over the past year, AWEA recently proposed a gradual six-year phase-out of the incentive - an idea that had been suggested by Republicans and Democrats alike - including by Sen. Chuck Grassley, R-Iowa, the author of the original PTC - as a possible way to win over some of the more conservative members of Congress.
But some wind power opponents are not budging. In fact, in a recent speech on the Senate floor, Sen. Lamar Alexander, R-Tenn., spent nine minutes slamming the Obama administration and the wind industry for what he said is both a “giveaway” to wind energy developers and “a brazen fleecing of the taxpayers.”
“This is a proposal that is as brazen as a midday bank robbery on Main Street,” he said. “It is a proposal by the wind developers of America to say to the taxpayers, ‘Please give us $50 billion or so over the next six years to phase out the federal taxpayer subsidy for wind power.’”
However, industry experts dispute Alexander's accusations.
In fact, “The PTC doesn't cost taxpayers a dime - it more than pays for itself in local, state and federal taxes over the life of the project,” AWEA spokesperson Elley Carey tells NAW, citing a study by NextEra Energy Resources. “It includes taxes paid during construction and operation of the wind farm.”
And, according to AWEA, Alexander’s claims about the $50 billion price tag are also inaccurate.
“The PTC is a good deal for taxpayers, and the numbers being thrown around by opponents are grossly exaggerated and include incentives for other technologies besides wind,” Carey says. “The Congressional Budget Office score for even a long-term extension of the PTC is less than $14 billion.”
However, according to Alexander’s office, the new PTC phase-out proposal has not received an official cost estimate from the Joint Committee on Taxation. The $50 billion figure, the senator noted in a statement, is an estimate from the American Energy Alliance, a conservative group with ties to Big Oil and other fossil-fuel industries.
In his speech, Alexander also suggested that the wind industry should have already planned for the PTC to expire because it was intended as a temporary incentive.
“The Congress has decided that federal taxpayer subsidies for wind power should end at the end of this year,” he said. “Everyone knows that; this is no surprise. It has been out there for a while, so businesses can plan on this.”
The senator’s attack on the wind industry didn’t end there.
“But the brazenness of those who have been receiving this giveaway money - it is hard to imagine how it could be exceeded by a so-called phase-out proposal,” he said. “[The industry] announced, ‘Phase us out over the next six years, through 2018.’ In 2013, the credit would be 100 percent. We would have the credit for next year at the same level it is this year. That’s estimated to cost about $12 billion over 10 years.”
However, AWEA stresses that if the PTC were to end abruptly, it would end up resulting in less tax revenue.
“Unless the PTC is phased out rather than ended abruptly, there will be much less wind installed in America,” Carey explains. “Lose the incentive suddenly, and you lose much of the $15.5 billion a year in private investment in U.S. wind farms, and the taxes they pay.”
“That doesn't include billions of dollars of savings to electric consumers from lower-price, fixed-cost wind energy,” she adds, referencing a study released in May by Synapse Group. According to the analysis, adding more wind power to the electric grid could reduce wholesale market prices by more than 25% in the Midwest region by 2020.
Alexander did acknowledge that wind energy “may” make sense in certain regions. However, he stressed that wind power cannot compete with the prices of other energy technologies in other areas of the country.
“There may be some places where windmills work, but not along the tops of the Tennessee mountains, or even in the valleys of Tennessee,” Alexander said. “I hope it becomes the poster child for what is wrong with spending in Washington, D.C. I hope the Congress will come to its senses this month and next month and say no to those who come forward with their hand out for this $50 billion giveaway.”
Alexander’s remarks should not come as a surprise, as the senator has attacked wind power repeatedly over the years. A huge nuclear power proponent, Alexander has called for 100 new nuclear plants to be built over the period from 2009 to 2029. In 2010, he released a paper entitled “Going to War in Sailboats: Why Nuclear Power Beats Windmills for America's Green Energy Future,” in which he slams President Obama’s efforts to spur renewable energy development and the U.S. Department of Energy’s 20% by 2030 wind power plan.
Despite Alexander’s harsh criticism of wind power, the PTC still has widespread bipartisan backing and many congressional supporters, including Sen. Mark Udall, D-Colo., who has given 27 speeches on the Senate floor urging his colleagues to extend the tax credit.