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AWEA and the Wind PTC: Blowing Hot Air

The Wind Industry is a universal model for efficiency… not in energy production, but in marketing its product. Only the best and brightest marketing team, like our friends at the American Wind Energy Alliance (AWEA) could convince so many Americans and their lawmakers that the federal government should continue to subsidize and industry that is the model of inefficiency in the energy sector.

The Wind Production Tax Credit, or PTC, was created by Congress in 1992 to subsidize the production of wind power. Wind producers receive a tax credit based on a formula dependent on the units of power their facilities produce. Since the programs original expiration date, it has been extended seven times in the name of moving America towards clean and sustainable energy.
At a cost of roughly $20 billion over the past two decades and another $22 billion in planned spending, pending an extension of the PTC, it’s a tragedy that wind has resulted in neither cleaner air nor greater grid sustainability. Congress is slated to decide on the fate of this expiring program this lame duck session.

As John Droz, the founder of the Alliance for Wise Energy Decisions, points out in his opinion editorial on the looming PTC battle, the Wind PTC subsidizes an industry that has yet to return on its lucrative investment. Wind rarely exceeds production greater than 30 percent of its rated capacity. When it does, the supply of wind is directly opposed to the market demand for energy. This issue results in a phenomenon known as negative pricing, where wind companies, seeking to continue to qualify for the production based subsidy, will actually PAY the consumers on the grid to take their power, profiting purely off of the remaining federal subsidy.

Proponents of the PTC extension like AWEA point to cleaner air and jobs as a reason to leave the multi-billion dollar program in place. However, they fail to mention that the PTC subsidizes an industry that strains the electrical grid and incentivizes largely foreign job markets at the cost of more US debt. The intermittency of wind forces conventional facilities to work harder and burn more fuel to maintain the even flow of the electrical grid; whereby the grid emits just as much, if not more pollution. The PTC, by distorting the market to incentivize the production of even more wind turbines, will only continue to exacerbate this strain on the US power supply.

Many of these new turbines will not even be produced in the United States. Foreign firms, producing windmills in places like China will continue to reap billions from US taxpayers to construct wind facilities.

In essence, there is no tangible benefit that large scale and subsidized wind power provides. Treasury coffers are drained, debt is accumulated, and Americans are taxed in order to assist a politically popular and well-connected industry to limp on.

Read more on why the PTC is purely bad policy and must be eliminated here, in John Droz’s article “Getting past the hype behind wind energy”.