Depending on residence or travel itinerary, some readers may not have witnessed the patches of geographic stubble that comprise modern windfarms. When driving through one for the first time, I was struck by their size, number, and seeming chaos of placement and function. Groves can extend for miles of typically algebracultural land and often appear to have been placed and pointed with the capricious whimsy of a toddler…or Bryan Caplan. Some pointing this way, some that. Some blades meandering insouciantly about their arc, while others directly adjacent stand stone still. Obviously one assumes extensive meteorological sampling and topographical calculations were conducted to ensure maximum efficiency, though then again this is a member of the United States congress.
And while passing through a vast expanse of towered turbo-props, I would idly muse at how these things could possibly offer a positive return on investment. To probably no one’s surprise, they do not.
What industry pays customers to take its product? The answer is the U.S. wind industry. Wind-generated electricity is typically bid in electrical wholesale markets at negative prices. But how can wind systems operate at negative prices?
The answer is that the vast majority of U.S. wind systems receive a federal production tax credit (PTC) of up to 2.2 cents per kilowatt-hour for produced electricity. Some states add an additional credit, such as Iowa, which provides a corporate tax credit of 1.5 cents per kw-hr. So wind operators can supply electricity at a pre-tax price of a negative 3 or 4 cents per kw-hr and still make an after-tax profit from subsidies, courtesy of the taxpayer.
As wind-generated electricity has grown, the frequency of negative electricity pricing has grown. When demand is low, such as in the morning, wholesale electricity prices sometimes move negative. In the past, negative market prices have provided a signal to generating systems to reduce output.
But wind systems ignore the signal and continue to generate electricity to earn the PTC, distorting wholesale electricity markets. Negative pricing by wind operators and low natural gas prices have pushed nuclear plants into operating losses. Yet, Congress is currently considering whether to again extend the destructive PTC subsidy.
Well apparently not every owner has to suffer the ignominy of getting rich through losing money. Others earn their wealth the old fashioned way: Handouts.
A windmill doesn’t make economic sense, even though this poor entrepreneur is gouged 19 cents per kilowatt-hour from his utility. A 121-foot, 100-kilowatt turbine from Northern Power runs $500,000, installed. The air at Driscoll’s site on Long Island Sound is so still that the average output would come to only 18% of peak output, meaning that the juice would be worth $30,000 a year. It’s hard to cover the interest on a $500,000 loan with a $30,000 annual payback. “If I had to borrow that kind of money for my business, it would be for printing equipment,” says Driscoll.
So taxpayers are going to buy the turbine for him. Or 83% of it, anyway. Driscoll’s firm, Phoenix Press, is getting a $263,000 grant from the Connecticut Clean Energy Fund, plus another $150,000 from President Obama’s renewable energy honeypot. That brings Driscoll’s outlay down to $87,000. He’ll sell excess electricity produced by the wind turbine back to his utility, United Illuminating, on nights and weekends, when Phoenix Press is closed, and he’s entitled to the same larcenous rate that United charges him during the day. He expects to recoup his outlay in less than three years.
* accelerated depreciation to write off the entire project in 5 years, 50% in the first year: this for wind turbines only
* the 2.3 c/kWh production tax credit, PTC, for 10 years, or
* in lieu of the PTC, receive a 30% investment tax credit, ITC, or
* in lieu of the ITC, receive a 30% cash grant at commissioning of the project, in case the wind turbine owner claims he has no taxes due against which to apply the ITC; “1603c clause of ARRA”, plus other government grants, low-cost loans, and loan guarantees.
Taylor/Tanton calculates ratepayers are paying an extra $8.5 to $10 billion a year for wind energy compared to natural gas-fired generation, and this will only increase as more capacity is added.
Add to this the more than $12 billion that the American taxpayer is paying for the ‘one-year’ extension for the PTC, and one can see that the wind industry is a boondoggle.
Well the renewable subsidy industry is certainly not a boondoggle for everyone, now is it?
The Bureau of Land Management, whose director was Sen. Harry Reid’s (D-Nev.) former senior adviser, has purged documents from its web site stating that the agency wants Nevada rancher Cliven Bundy’s cattle off of the land his family has worked for over 140 years in order to make way for solar panel power stations.
Deleted from BLM.gov but reposted for posterity by the Free Republic, the BLM document entitled “Cattle Trespass Impacts” directly states that Bundy’s cattle “impacts” solar development, more specifically the construction of “utility-scale solar power generation facilities” on “public lands.”
Back in 2012, the New American reported that Harry Reid’s son, Rory Reid, was the chief representative for a Chinese energy firm planning to build a $5-billion solar plant on public land in Laughlin, Nevada.
And journalist Marcus Stern with Reuters also reported that Sen. Reid was heavily involved in the deal as well.
“[Reid] and his oldest son, Rory, are both involved in an effort by a Chinese energy giant, ENN Energy Group, to build a $5 billion solar farm and panel manufacturing plant in the southern Nevada desert,” he wrote. “Reid has been one of the project’s most prominent advocates, helping recruit the company during a 2011 trip to China and applying his political muscle on behalf of the project in Nevada.”
“His son, a lawyer with a prominent Las Vegas firm that is representing ENN, helped it locate a 9,000-acre (3,600-hectare) desert site that it is buying well below appraised value from Clark County, where Rory Reid formerly chaired the county commission.”
So Harry wants a herd of hamburger off the land his son needs to sell the sedge hats so they can slap acres of plastic mirrors in the desert in exchange for a few billion dollars of newly printed subsidies. I fail to see the problem.
Though it’s possible the teabagger racists might maliciously suggest some moral infirmities on the part of the Senator from Nevada. So he is moving expeditiously to distance himself from the appearance of impropriety, and will certainly take no public position on related legislation…or perhaps I am wrong.
Senate Majority Leader Harry Reid (D-Nev.) wants the full Senate to vote soon on a package of tax break extensions that includes a wind energy tax credit and other energy incentives.
Reid told reporters Tuesday that he briefly spoke with Sen. Ron Wyden (D-Ore.), chairman of the Finance Committee, earlier that day. “I told him I want to move this bill sooner rather than later,” Reid said. “So he and I will visit further.”
Though no matter how doggedly the right-wing press hounds this story, Mr. Reid is unlikely to unseat his colleague to the south as World’s Most Hated Senator. The incumbent is thought to have secured this title for another generation after averring recently that Illegal aliens are absolutely not going home…not even if they want to…and by God, I’d like to see them try.
Sen. John McCain (R-Alzheimers) said Wednesday that immigrants living in the United States illegally are not going home, and that the U.S. has no practical way of forcing them to leave.
“They’re not going home. And so why don’t we give them a path to citizenship,” McCain asked at Harvard University’s John F. Kennedy Jr. forum.
“There are not enough buses to deport them,” he added.
Well, what if we offered an 83% subsidy to Chinese automakers for every bus they export to the US? Might that ramp up the fleet in short order? Hell we might even be able to use a few of the buses on more than one trip. This is exactly the type of outside-the-box solution that Messrs. Reid and McCain will appreciate. We’ll get Rory Reid on point.
And with that item now resolved, I’ll summarize what was already an article of laser focus: “Green” businesses collude with venal politicians to create sustainable subsidies, which enrich unviable industries that reciprocate with portions of proceeds being shunted to political family members or reelection campaigns. Businessmen get rich; purchasers get practically free equipment; and politicians remain off the street.
It’s a win-win-win proposition.
It’s your Kakistocracy.