Will Wind Energy Be The First Casualty of The Fiscal Cliff?

Author: Devon Bass
Published: November 20, 2012 at 5:45 am
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wind energyA little more than half the nation’s state governors have come together to petition the U.S. Congress to renew wind energy subsidies that are scheduled to end this.   Given that the lame duck congress has its hands full dealing with a solution to the fiscal cliff, it is far from certain that anything is going to get done to preserve the subsidies that have been the lifeblood of the wind industry for two decades.

The wind energy tax credits were last given an extension in 2005 when the George Bush administration renewed credits first established in his father, George H. W. Bush’s, administration.   Despite its republican pedigree, the wind energy tax credit today is opposed by republicans in congress.   An earlier attempt to extend the credit was blocked by republicans last summer.

Feed by the tax credit which pays energy producers for each kilowatt hour of electricity sold to the grid, the wind energy industry has surged in recent years.  Proponents of wind energy and the wind energy tax credit feel that wind is a critical part of a renewable energy mix; One that is needed to displace more traditional fossil fuel burning methods of generating electricity.

Many of them, including Senator Chuck Grassley (R) of Iowa, feel that after decades of subsidies the industry is just a few years from reaching critical mass and being able to stand on its own.   Pulling the plug now, they argue would risk wasting all of the billions in tax payer money that has been injected into the industry to get it this far.

Critics feel that more subsidies at this point would be throwing good money after bad and that if the industry isn’t economically viable by now without public money it may never be.  Indeed, the economics of wind energy are made more challenging by the extremely low price of natural gas.  Natural gas which has seen a dramatic drop in price in recent years due to new drilling technology is a competitor of wind for electricity production.

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Article Author: Devon Bass

Devon Bass is the founder of Vault Energy Solutions. He has worked in the energy industry for almost 20 years, first as a Market Maker for some of the largest energy companies in the world, then as an energy consultant to commercial, industrial and municipal entities. …

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