To the relief of the wind energy industry in the United States, the Production Tax Credit was extended for another year as part of the New Year's fiscal cliff deal approved by Congress. However, not everyone is happy with the extension. According to the Institute for Energy Research , the one-year extension of the tax credit for the construction of new wind farms will create "a real boondoggle at the expense of taxpayers and ratepayers." Here are the details.
* According to the Institute for Energy Research, a recent American Tradition Institute study showed that the cost of wind power is up to double the cost reported by the Energy Information Administration, with an extra $8.5 billion to $10 billion a year being spent on fossil fuel power backup, additional costs of transmission, tax benefits through accelerated depreciation and a shorter estimate lifespan of a wind turbine.
* In addition to those costs, the costs of new construction, maintenance, operation over the lifetime of the plant drive the price of wind power to 15.1 cents per kilowatt hour if natural gas is used as a back up and 19.2 cents per kilowatt hour if coal is used as the backup fuel, the institute reported. Currently, the Energy Information Administration uses an estimated cost of 9.6 cents per kilowatt hour in its models.
* According to the institute, the Production Tax Credit's one-year extension means 10 years of government subsidy for wind operators who have begun construction of their wind farms during 2013.
* The institute points to a Jan. 2 article from The Hill in which House Committee on Oversight and Government Reform Chairman Darrell Issa, R-Calif., referred to the extension of the Production Tax Credit as "a perverse incentive to rush production of additional facilities even when there may not be adequate demand for wind, biomass or geothermal energy."
* Issa, who said the incentive's renewal falls under the committee's "ongoing oversight of the federal government's excessive and wasteful spending" has created a new energy subcommittee and has pledged that his committee will be more involved in energy issues in the next congress, The Hill reported.
* According to the Institute for Energy Research, the EIA lists the levelized cost of an advanced natural gas-fired combined cycle plant as 6.3 cents per kilowatt hour and that of an advanced coal-fired or nuclear plant at 11.1 cents per kilowatt hour, making wind energy up to 140 percent costlier than other energy sources.
* The institute reported that a power company in South Carolina is investing about $11 billion to construct 2 1,100-megawatt nuclear reactors on about 1,000 acres. To get the same amount of electricity from a wind farm that operates at 30 to 40 percent capacity due to intermittency, the institute stated, more than 1,700 turbines on 200,000 acres, for an upfront investment of $8.8 billion would be required.
* According to the institute, taxpayers will pay more than $12 billion in the subsidy provided by the Production Tax Credit one-year extension, in addition to the $8.5 billion to $10 billion in hidden costs from wind energy.