Commentary: Wind energy credit is successful

Source: By Elizabeth Salerno, vice president of Industry Data and Analysis,American Wind Energy Association, The • Posted: Monday, January 13, 2014

The federal Production Tax Credit (PTC) for wind power must be extended for 2014 and Congress has yet to act. This has injected uncertainty into the market and threatening the livelihoods of thousands of hardworking Americans.

While some detractors in Congress attempt to frame the PTC in a negative light, the facts show the incentive for wind power is wildly popular on both sides of the aisle, not only for its effective, market-based design, but also for the economic development it helps create.

The wind power industry employs over 80,000 Americans in manufacturing, construction, operations and maintenance, and many other multi-disciplinary roles. Wind power is constantly innovating, taking advantage of new technologies and materials to reap efficiency gains from turbines on a continuing basis. Persistent innovation is one of the reasons why the cost of wind energy has declined 43 percent in the past 5 years.

With the support of the PTC, wind power attracts an average of $18 billion annually in private investment, with a record $25 billion in 2012. That money, combined with lease payments to property owners and taxes paid to local and state authorities translates into significant economic gains for those who host wind farms, particularly rural communities.

With wind industry activity in 70 percent of all U.S. Congressional districts, those gains aren’t missed by legislators, Republican and Democrat, who support wind power on the grounds that it is creating jobs, diversifying regional economies, and saving consumers (constituents) money on their power bills.

In November, The Governors’ Wind Energy Coalition, a bipartisan group that includes the governors of 23 states from every U.S. region, noted that adding wind power does “reduce total consumer energy costs over time, diminish our dependence on foreign oil, decrease the trade deficit, and lessen carbon emissions.”

Wind power competes healthily with more established, traditional forms of energy. Data from the 2013 U.S. Energy Information Agency (EIA) Annual Energy Outlook report shows, taking into account all energy incentives across all sources, newly built wind generation is cost competitive with all forms of electricity–currently second only to natural gas.

The value of the PTC flows through to the consumer in the form of more wind farms that offer lower electricity rates. The policy allows wind energy project owners to negotiate lower-cost power purchase agreements with electric utilities and lock-in rates for 20 to 30 years, therefore passing the value of the PTC ultimately onto the ratepayer in the form of lower prices.

Utilities have taken note across the country, even in the Southeast, where providers are buying wind power from central states. Says Alabama Power: “[T]he delivered price of energy from the wind facility is expected to be lower than the cost the Company would incur to produce that energy from its own resource (i.e. below the Company’s avoided costs), with the resulting energy savings flowing directly to the Company’s customers.”

The PTC is a proven policy that works for consumers, as demonstrated by a recent survey by USA TODAY that found 73 percent of Americans believe tax incentives should continue for renewables like wind, solar, and hydropower.

The year-on-year uncertainty associated with renewing the PTC creates market conditions that are unheard of by most every industry in the country.

While we must address the broader issue of tax reform in this country, we must also acknowledge that until concrete changes can be made to place the full spectrum of energy sources on a level playing field, the PTC is an important, effective, and affordable way to make sure we aren’t picking winners and losers on Capitol Hill. Absent comprehensive tax reform, why should wind be the only source of energy to lose its primary incentive?

Wind power with the PTC is a bipartisan success story. Polls show Americans support it, and anyone else who supports homegrown jobs and manufacturing, clean, affordable electricity, and increased energy security should too. The PTC is living proof that when we work together, we can accomplish great things, and secure our energy future while we’re at it.

Salerno is vice president of Industry Data and Analysis at the American Wind Energy Association.




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