• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • Blowing More Taxpayer Money for Offshore Wind

    Much of the debate over wind subsidies this past year has been over the extension of the wind production tax credit. But even if the subsidy expires at the end of the year (as it is supposed to), that does not mean all wind subsidies are disappearing, even though they should.

    The wind industry receives subsidies in a variety of ways, the latest example being the Department of Energy’s (DOE) Advanced Technology Demonstration projects. This program is on top of the wind production tax credit, which is worth about 40 percent or more of the wholesale value of electricity—so generous, in fact, that wind producers can actually sell their energy to the grid for negative prices and still collect a profit from the taxpayers.

    When selling the electricity to grid operators, wind suppliers can underbid other electricity producers in times of excess supply, because the wind producers will collect the $22 per megawatt hour generated from the tax cut.

    The DOE has already awarded over $200 million as part of its Wind Program, and simply looking at the goals of the program indicates why taxpayer dollars should not be allocated to programs like this. The DOE website reads, “The DOE Wind Program is leading market analysis, technology development, and deployment projects that will overcome key barriers including the relatively high cost of energy, the mitigation of environmental impacts, the technical challenges of project installation, and grid interconnection.”

    Higher costs for a technology should not be a signal for the government to step in and try to lower those costs to make the politically preferred technology competitive. By attempting to force government-developed technologies into the market, the government diminishes the role of the entrepreneur and crowds out private-sector investment. This practice of the government picking winners and losers denies energy technologies the opportunity to compete in the marketplace, which is the only proven way to develop market-viable products.

    When the government attempts to drive technological commercialization, it circumvents this critical process. Thus, almost without exception, it fails in some way. This is true with renewable technology, fossil fuel technology, or technologies pushed forward by the DOE to make businesses and homes more energy efficient.

    The same reasoning holds true for why Congress should not extend the wind production tax credit. An extension would perpetuate America’s addiction to energy subsidies and create technological stagnation that adversely affects the long-term competitiveness of the wind industry.

    Providing another year of tax credits would be a $12 billion taxpayer-funded mistake that would further distort the electricity markets and, on net, cause economic harm by shifting labor and capital toward windmill production and away from more economically valuable investments. If the windmills add value to the economy, they won’t need the subsidy.

    All of these subsidy programs continually ignore the fact that we are always going to have a demand for electricity—and we have ample supply from a variety of sources to meet that demand. The resources and technologies that can most efficiently meet that demand will all almost certainly have one thing in common: They won’t need a government program to be successful.

    Posted in Energy, Featured [slideshow_deploy]

    6 Responses to Blowing More Taxpayer Money for Offshore Wind

    1. Carl says:

      Wind Energy is a growing segment of the power grid. It is cleaner than oil and coal. Off shore stations offer a reliable source of generation. The start-up costs are large. The long-term benefits are also large. The taxpayer costs of fossil fuels has been and continue to be extremely high. Where are the needed articles about how much the coal industry costs the American Taxpayer directly and indirectly. The Black Lung Disability Trust Fund has cost Billions of Tax dollars and it's not even a direct cost of power generation! Billions more are spent on the fossil fuel industry than renewable sources. Why pick on Wind and completely omit the HUGE payouts and costs of a mature industry like oil and coal?

      • Lloyd Scallan says:

        Because oil, natural gas, and coal are reliable sources of energy, wind is not. What happens when the wind don't blow or a hurricane blows down the windmills? The "start-up cost" is more than just "large" when considering the cost to the environment and private lands that the will suffer when the transmission lines must be installed to get the power to the consumer. Every aspect of what we use in our daily lives cost something. Eating cost the "American taxpayer, directly and indirectly". Driving, taking a bath, flushing the toilet all cost something. How's about smoking and lung cancer? Don't blame coal or fossil fuels for every ill that effects America. It's those like you that cause the cost of energy to continue to rise because of restriction that are forced on the fossil fuel industries which in turn force all of us to be lighter in the pocket book.

        • Carl says:

          The title of the article is referring to Offshore Wind production, which certainly is reliable. The wind is not obstructed by buildings, trees, or mountains in the ocean and certain areas are well documented for their high sustained power potential. Turbines are located after measurements are made to determine the average flow rate of air in a given area. The structures are engineered to weather most storms and hurricanes. Ask folks along the Gulf Coast if oil platforms can weather hurricanes…You use the phrase "cost to the environment and private lands" in the same paragraph advocating unrestricted fossil fuel strip mining, pollution pumped into the atmosphere, occasional spills, pipelines layed over hundreds of miles of wilderness. I assume you think Fracking is safe because the profiteering oil producers tell you the mystery fluid they're pumping underground is safe right? What does eating, driving, taking a bath, flushing the toilet, and smoking have to do with taxpayer supported energy production, which is the subject of the article I replied to. Offshore wind development does not have the huge detrimental side effects fossil fuel mining has to the American Taxpayer.

      • Glenns says:

        Yea like solar panel electric. At a prison In Maryland one company wants to put up solar panels on 158 acres of land. The cost 154 million dollars, would only provide electric for 2,000 homes. Not very cost-effective. So how much land would be needed to power New York City? How many wind mills needed to power New York City? It will also be like cell phone towers. I want the cell phone but don't want to see the tower.

    2. Sidney Belinsky says:

      The fossil fuel is finite. Thanks to shell gas and oil we might stop for some time importing oil. But how long it would last? 50 years? 100 years? And then what?
      As long as The Sun would shy the wind would blow along the continents. It is intermittent, but you can store its energy and use it when wind is down. Since wind in one place is down in other place it is up, so using transmission lines, in addition to storage, would ease intermittence of the wind. Only through 3 human generations for conventional oil almost dry-out in Texas and now it is drying out in Alaska.
      Offshore wind is the future energy for humanity. Today it is expensive, but it took time to learn how to drill for oil and it would take time to improve technology for harvesting wind. We have to start it up today, so in 10-20 years the cost and volume of electricity from offshore wind would be equal to electricity generated by gas burning power plant.

    3. Terry says:

      It isn't just the wind industry, there is a whole plan, please take some time and watch the following:

      Here is an excellent shorter video explanation of Agenda 21: http://www.youtube.com/watch?v=y5tX7sYDVUI (15 minutes)
      Here are some additional videos on what Agenda 21 is: http://www.youtube.com/watch?v=43u936bgTps (2 minutes)
      http://www.youtube.com/watch?feature=endscreen&am… (Glenn Beck – 15 minutes)

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.