The wind producers Production Tax Credit (PTC) extension was voted down in the Senate. The PTC awards a tax credit of $0.023 for each kilowatt-hour (KHW) produced. The PTC expired at the end of last year. This subsidy began in 1992 with the idea that it was a temporary assist for renewable energy to become competitive with traditional sources of electricity. The subsidy was initially set at $0.015 per KWH. It is adjusted annually. It has been renewed many times. Twenty-two years of subsidies and the PTC wind and solar are still not competitive.
Unfortunately about half of the States have renewable energy mandates that require the State to buy a certain percentage of its total power from renewable sources. This will keep some amount of renewable power in business.
Wind and Solar produced electricity can’t be reliably scheduled. Wind doesn’t blow all the time and the sun is on average only available for something in the range of half a day, given no clouds. The nations power grids must balance supply and demand on a moment-to-moment time frame for its customers. Until (and if) a reliable and economic way to store the electricity generated by renewables is developed, fossil fuel generated power back-up is necessary to quickly adjust to changes in supply and demand.
These subsidies allow crony capitalism to exist. Favored groups are selected and the subsidies allow them to make money. Because the government doesn’t have any money except what they can take from the taxpayers, this means we are the ones that pay. And on a continuing basis the homeowners pay for high priced power.
Well, before we think we have made at least one step toward sanity because the PTC was voted down in the Senate, remember that the advocates of the PTC have found ways to get it renewed year after year. The vote in the Senate was 51 against the PTC and 46 for. Not a big margin. Especially considering that three Republicans voted for its renewal. It will not be renewed if there is a vote on the PTC all by itself. But there will be many opportunities to bundle the PTC into some big bill everyone wants passed.