“The PTC was created in 1992 to get the wind industry off the ground. Yet 20 years later, we have little to show for it.”
When it comes to rent-seeking by business, Concentrated Benefits + Diffused Costs = Government Growth.
In “Regulatory Failure by the Numbers,” a simple hypothetical was given:
“While the benefits of a regulation may be enjoyed by a relative few, the costs are often spread out among many. If the per person cost of a regulation is only a dollar or two, no one has a financial incentive to travel to Washington to lobby against it.”
Economists in the 19th century understood the problem created by this incentive asymmetry, and Michael Giberson found this in a 1935 book explaining the passage of the Smoot-Hawley Tariff:
Wind proponents cite their industry as one of the fastest growing sectors of the American economy, having doubled U.S. nameplate capacity since 2008. But let’s be clear: that recent growth is largely due to the massive infusion of public cash lavished on big wind under the American Recovery and Reinvestment Act of 2009 (ARRA), which is anticipated to pay out $22.6 billion in direct grants with 85% claimed by wind.
Expiration of Section 1603 cash grants, coupled with record-low natural gas prices, will likely collapse the stimulus-induced bubble and push installations back to mid-2000’s levels. Even if the production tax credit (PTC) is extended, offsetting above-market wholesale prices, recent growth will not be repeated.
Wind and State RPS Policies
In the last ten years, more than half of the states adopted renewable portfolio standards (RPS) that encouraged development of home-grown low-emission generation.…