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Stop Building a "Model-T" Energy System September 22, 2012 8:36 AM | Tagged as Energy Policy, Wind

 

Ref: WSJ Sept 19, 2012 A13 – “Puff, the Magic Drag on the Economy” by Alexander and Pompeo

 

The craze for renewable energy often makes no economic sense. Many ideologues (in areas other than economics) are absolutely sure that power generation by renewables makes good national policy. However, the facts are clear and negate their thinking. We can’t afford to keep putting good money after bad forever.  

 

Wind power has been subsidized by the federal government to the tune of $22 per megawatt hour generated since 1992. Originally, this subsidy was to help the wind-power industry develop from a fledgling gleam in the environmentalists’ eyes to a sustainable, profitable, mature industry. Well, guess what? It has been twenty years and the industry is admittedly mature…but not profitable.  US tax payers have popped for about $14 billion including both this energy tax credit and the wind portion of Obama’s stimulus package in 2009.

 

The tax subsidy is so large that wind generator operators can bid into electric power markets at times when power costs are low by bidding a negative number. The means they are PAYING to generate their electricity just to get the tax credit! This replaces profitable power with unprofitable power. This is economically unsustainable.

 

The production tax credit is expiring on December 31, 2012. Let’s hope Congress does the right thing and does NOT extend the tax credit. Otherwise, we will be needlessly paying a $12 billion price tag over the next ten years for nothing useful.  Has anyone noticed we are in a prolonged recession?


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