Republicans To Repeal PTC For Wind

May 16th, 2015 by Susan Kraemer

US congressional Republicans have long hobbled wind development. In April, they introduced a bill to kill it off entirely.

The surprisingly forthrightly named PTC Elimination Act introduced in the House by Rep. Marchant and cosponsored by 15 more Republicans, H.R. 1901, would “amend the Internal Revenue Code of 1986 to phaseout and repeal the credit for electricity produced from certain renewable resources.”

“The wind lobby says it wants certainty on the wind PTC and that’s exactly what this bill accomplishes,” said American Energy Alliance President Thomas Pyle.

Right. Certain death.

H.R. 1901 would not just eliminate the PTC for future projects but also retroactively alter PTCs already in place, according to the American Wind Energy Association (AWEA):

Prevent an extension of the renewable energy production tax credit (PTC), an effective, market-based business tax incentive that reduces energy costs for Americans in all parts of the country and

Impose retroactive changes affecting business deals that have already been signed.

Retroactive subsidy cuts are a sure way to kill off an industry. Spain killed off its rapidly growing domestic solar industry when it retroactively cut tariffs paid for solar power. Investors fled.

The Production Tax Credit (PTC) drives the US wind industry, currently paying wind energy producers 2.3 cents for each kilowatt hour produced. The fact that it pays only by actual production catapulted US wind to global leadership in production.

US wind output exceeds that of the global capacity leader since 2010; China. In 2014, the US produced 181 terawatt hours of wind from its cumulative total of 66 GW installed. China had a cumulative total of 96 GW installed by the end of 2014, but generated a relatively fewer 153 terawatt hours.

Chinese policy does not push its wind developers to have the same singleminded focus on efficiency as the PTC does in the US, and less than 2% of its turbines are allowed to be foreign made. So to some extent, China is reinventing the wheel, which takes longer.

(Also, China’s lower relative output is partly an artefact of statistics: China was adding capacity at top speed, and the faster capacity gets added, the fewer gigawatt hours will be tallied as generation in relation to installations in any one year until capacity additions stabilize.)

But in the US, an impressive 16 million homes are now entirely wind powered, and likely for the next 80 years or more, if not forever. With US results like this after a few decades — even with with inconsistent subsidies — it is likely that given a level playing field of permanent tax treatment like a permanent PTC repeatedly proposed by President Obama, wind-powered electricity could result in electricity prices that are cheaper than fossil-fired electricity is now.

For its first decade, the PTC was too insignificant (at 1.5 cents) to impact growth, but since 2005, it has driven the industry on a roller coaster ride.

At the end of almost every year, the PTC expires and must be extended another year, or what’s left of the year, or in rare renewable-friendly congresses like 2009’s, for several years. Only 13 congressional Republicans — 6 from states providing over 25% of their electricity from wind — are among the 162 congress members supporting extending the PTC.

Each failure to extend it has resulted in a crash the following year, with even major firms exiting the US, and each extension creates a mad one-year dash. “A lot of Christmases ruined,” as one former wind industry insider described it.

The last time the PTC was extended, it was already bad enough, at just a few-week extension at the end of the year, an essentially meaningless extension in a development environment where siting, permitting, financing projects take, well, duh: more than a coupla weeks. This ain’t fracking.

Four times more new wind generating capacity came online in 2014 than in 2013, when wind deployment was down 92% from 2012 levels because of policy uncertainty over what turned out to be a brief lapse, but costing 30,000 wind industry jobs before picking up again.

Despite the roller coaster of this never-ending battle over the PTC with congressional Republicans, wind power has lurched along to become our cheapest utility-scale electricity, budged forward every year or so by the PTC. And that is what has the fossil fuel industry riled up to the point of proposing to eliminate it altogether.

So far, 15 Republicans have cosponsored H.R. 1901. But the fossil energy industry appears to have put it on the front burner. Modeled on the infamous “climate pledge” required of candidates for Republican seats in congress, AEA will include co-sponsoring the PTC Elimination Act as a component of a Member’s final score in their American Energy Scorecard, a litmus test of their loyalty to the fossil energy industry.

Opposition is running at 71% at Popvox, a site offering a quick way to let your congressperson know your sentiments, and that apparently is more effective than you might imagine, according to one former congressional staffer.

After all, nobody wants to be the next Eric Cantor.









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