US Wind Industry Under Siege: Congress Set to Cut Subsidies as Communities Boil Over
Wind power opponents seek repeal of tax credit
The Seattle Times
Hal Bernton and Erin Heffernan
21 September 2014
FOREST, Wisconsin — When wind-power developers prospected the rolling hills around this small dairy town, they found plenty of gusty sites for turbines. In 2011, they proposed a $250 million project with up to 44 turbines that could produce enough energy to power thousands of homes.
Since then, nothing has come easy for the developer in a state that has emerged as a stronghold of resistance to the spread of wind power.
In Forest, opponents gained enough votes to take over the town government, sued in state court to try to block the project, and added their support to a national movement that seeks to end the federal tax credit for the wind-power industry.
“We are here to protect our property values, our eagles, our health and our town,” said Brenda Salseg, spokeswoman for the Forest Voice, the local opposition group, which posted online a form letter urging the Wisconsin congressional delegation to oppose the tax credit.
The tax credit was passed by Congress in 1992 and has been periodically extended. It is currently set at 2.4 cents per kilowatt hour, and, during times of glutted electricity markets, can be worth more than the wholesale price of power.
This tax credit has helped catapult wind power to the front of the U.S. efforts to launch a renewable-energy industry.
By the end of 2012, wind power represented 43 percent of all new U.S. electric generation installed that year and was hailed by the Obama administration as a key in the global effort to combat climate change.
Wind power also has been bolstered by state mandates that require utilities to acquire a certain percentage of the power from renewable-energy sources.
The turbines operate in more than three dozen states, from Washington’s Columbia River Plateau to the Allegheny Mountains of Maryland, and in 2013 provided more than 4 percent of the nation’s power, according to a Lawrence Berkeley National Laboratory report.
In many areas, wind turbines have been welcomed as an economic boon to landowners who are paid for leasing acreage.
But as wind power has grown, so, too, has the opposition.
In some communities, such as Forest, developers have faced a backlash from residents concerned about the noise and health effects of living near wind-power projects.
The toll on birds and bats killed by turbine blades has drawn scrutiny.
Critics have attacked wind power as a fickle source of electricity that ebbs whenever the wind dies down. They fault the tax credit for encouraging new projects when many utilities have plenty of power.
Over time, the politics of wind power have become more partisan.
Most of the wind-power capacity is within Republican congressional districts, but many politicians in the party have made ending the tax credit part of their agenda. This year, efforts to extend the tax credit have made little headway in the Republican-controlled House.
Some House Republicans such as Rep. Dave Reichert, R-Wash., still back the tax credit, according to Reichert’s spokeswoman. But some former supporters have turned against it.
Rep. Kevin McCarthy, the House majority leader, once advocated the tax credit that helped spur investment in wind farms in his California district. But before his June election to his leadership position, he told the Wall Street Journal he thinks wind companies no longer need the tax credit.
“My feeling is the current situation is as bad as it has ever been,” said Robert Kahn, a Seattle consultant who represents wind-power developers. “Congress is so polarized about so many things that if some people are for it, other people are going to have to be against it.”
The fight against the tax credit also has been championed by Americans for Prosperity. One of the nation’s most prominent conservative advocacy groups, it was co-founded by billionaire David Koch, who has extensive interests in the fossil-fuels industry.
The organization last fall sent an open letter to Congress signed by more than 100 groups, including many smaller groups formed to fight wind power.
Wind-power advocates note that fossil-fuel industries have received federal subsidies for decades, such as a tax provision that allows favorable write-offs of oil-drilling costs. They say the government should put a price on carbon, or continue offering incentives for technologies that produce energy without carbon emissions. “We don’t want to lower or eliminate our tax credit when everyone else gets to keep theirs,” said Jim Reilly, a senior vice president of the American Wind Energy Association.
The wind-power tax credit extends over the first 10 years of a project’s operation. Congress has typically extended the credit a few years at a time, creating financial uncertainties for the wind-power industry.
In 2013, installations of wind farms declined by more than 90 percent from the previous year, reflecting concerns that the credit would not be extended.
Congress did extend the credit that year, eventually prompting many companies to break ground on projects.
Many are going in this year, putting the industry on a record pace for construction, according to the American Wind Energy Association.
The cost of new power has plummeted to record lows. The average price of about $25 per megawatt hour for power-purchase agreements in 2013 was nearly a third less than in 2009, according to a study by the Lawrence Berkeley lab.
What would happen if the tax credit dies?
Ryan Wiser, a co-author of the Berkeley report, said that would push the price of wind power past $40 a megawatt hour, and cool investor interest.
“The number of projects would be much less, but there is no doubt there would be some,” Wiser said.
Even without a tax credit, wind power also would receive a boost from President Barack Obama’s proposed rule to limit emissions from existing power plants. It could prompt the closing of some coal plants and open up more demand for turbine power.
But the proposed rule is opposed by many Republicans, and already is facing court challenges.
Conflict still rages Wisconsin once was swept up in the wind-power boom. But it’s now an example of how a state, even with federal incentives in place, can put the brakes on turbines. Many wind-power projects in Wisconsin are on relatively small properties, increasing the potential for conflicts with neighbors who don’t receive any lease payments but find themselves living next to turbines.
“The first day the turbines came on, I thought it was a jet plane taking off,” said Gerry Meyer, a retired mail carrier who complains of health effects from living near turbines in rural southeast Wisconsin.
Meyer has testified at state legislative hearings and also networked with Forest activists seeking to block the wind-power project proposed there by Emerging Energies.
These opponents have found some powerful allies among state Republican politicians.
“Wind turbines have proved to be an expensive, inefficient source of electricity, and thus any future construction of turbines simply is not a policy goal or object that should be pursued further,” Gov. Scott Walker wrote in a 2010 campaign memo obtained by the Milwaukee Journal Sentinel.
Walker, once in office, backed a legislative effort to increase setbacks for turbines by increasing the distance they must be located from a neighbor, and measuring that setback from the neighbor’s house rather than property line. That 2011 effort failed.
But a legislative committee voted to suspend the state’s wind-siting rule to study the health effects of wind turbines.
By the time the rule was reinstated a year later, five Wisconsin wind projects had been suspended or canceled, according to Clean Wisconsin, a wind-power advocacy group. New installations of turbines plummeted in the state.
In the months ahead, developers’ attorneys will argue in court for the right to finally move ahead on the Forest project.
Meanwhile, an emotional battle over the project continues to rage within the community. “It’s been devastating for the town,” said Carol Johnson, a Forest resident who supports the project. “Many family members will never speak again … It’s just torn the town apart.”
The Seattle Times
As it goes in Wisconsin, it goes all around the globe: spear giant fans into closely settled rural communities and the only thing guaranteed to be generated isn’t meaningful power, but a constant source of anger, hostility and community division. What makes these people so wild is that all their suffering has done nothing for the economy or the environment, leaving them feeling like dupes in the greatest fraud of all time (see our post here).
We love the line about how closing coal plants would “open up more demand for turbine power”. We think that’s a form of flattery best reserved for first dates. There is no “demand for turbine power”. In the absence of mandated targets (shortfall charges, penalties and the like) or massive subsidies there is NO demand for an unreliable and intermittent power source that can only ever be delivered at crazy, random intervals (see our post here). Wind power is not an alternative energy source (unless you’re prepared to sit in the dark for hours and days on end?) and will never be a substitute for conventional generation sources available on demand (see our post here).
We note a lot of “brave” talk about the wind industry being able to survive if the US Congress does away with the Production Tax Credit (PTC).
If the tax credit dies, the US wind industry dies – it will not be a case – as Ryan Wiser asserts – that: “The number of projects would be much less, but there is no doubt there would be some”.
What utter piffle. Cut the subsidies and there will never be another wind turbine erected anywhere, ever again.
The massive stream of subsidies – like the REC and PTC – provide the ONLY explanation for the wind industry – as recognised by the “Sage of Omaha”, billionaire Warren Buffett – whose company Berkshire Hathaway has invested $billions in wind power in order to get at federal subsidies – namely the PTC – which is worth US$23 per MW/h for the first 10 years of operation.
A subsidiary of the Buffett-owned MidAmerican Energy Holdings owns 1,267 turbines in the US with a capacity of 2,285 MW – eventually when the company’s Wind VIII expansion is finished, MidAmerican will own 1,715 turbines with a capacity of 3,335 MW. Buffett has piled into giant fans for one reason only: to lower the tax rate paid by Berkshire Hathaway.
As Buffett put it earlier this year at his annual investor jamboree in Omaha, Nebraska:
“I will do anything that is basically covered by the law to reduce Berkshire’s tax rate. For example, on wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.”
There, Warren Buffett said it, not us.
At least he had the honesty and integrity to explain the only conceivable basis for the greatest rort of all time. And isn’t it so much better when those that profit from it choose not to speak with “forked tongue”. Maybe Ryan Wiser, the CEC and AWEA can take a leaf out of Warren’s book?