“… I also know this credit won’t go on forever. It was never meant to, and it shouldn’t…. I have expressed support in the past for a responsible, multi-year phase out of the wind tax credit. But…”
– Senator Charles Grassley (R-Iowa), an original author of the 1992 Production Tax Credit (PTC)
Special government favor has propped up solar power since the 1970s and wind power since the early 1990s. One decade turning into the next, the (not-so) “clean energy” lobby has repeatedly made promises that their technologies are, or soon will be, competitive with electricity generated from natural gas, petroleum, or coal.
Documentation of this failure is well reported here at MasterResource and by the Institute for Energy Research. This particular post reproduces in large part a 2015 piece by the American Energy Alliance (IER), “Wind Fail: 20 Quotes for 30 Years of False Hopes.”
Grassley’s Wind Politics: 2015
Senator Charles Grassley of Iowa, one of the original authors of the wind PTC, made clear that despite his past statements, he wanted yet another extension of the PTC. He stated in a letter to Orrin Hatch, chairman of the Senate Finance Committee (July 7, 2015):
But, I also know this credit won’t go on forever. It was never meant to, and it shouldn’t. In 2012, the wind industry was the only industry to put forward a phase out plan. I have expressed support in the past for a responsible, multi-year phase out of the wind tax credit. But, I believe any phase out should be done in the context of comprehensive tax reform, where all energy tax provisions are on the table.
Sen. Grassley admitted the wind PTC should eventually expire and upported a phase out. It is clear that today Sen. Grassley does not want to see the wind PTC expire on his watch. Of course, this is significantly different than what he said 12 years ago:
I’d say we’re going to have to do it [keep the PTC] for at least another five years, maybe for 10 years. Sometime we’re going to reach that point where it’s competitive (with other forms of energy). I think the argument for any tax credit is to make the new source of energy economically competitive. (“Wind Energy Rides Roller Coaster Year.” Electrical Wholesaling, 4/1/03)
And here we are (2015). The American Wind Energy Association (now, American Clean Power Association) claims that wind is not only competitive, but cheaper than other sources. In fact, AWEA claims that “the current cost of wind energy of under $50/MWh.” To put that in perspective, the Energy Information Administration explains that new combined cycle natural gas plants will produce electricity for $72/MWh. It appears that Sen. Grassley either does not believe the wind lobbyists now or he was not being truthful in 2003 when he spoke about the PTC.
A Litany of False Claims
It turns out that wind promoters like Sen. Grassley and AWEA have long made claims that wind would soon be cost competitive and that the PTC would not be needed forever. Here are of some of their claims over the years:
1983 – Booz, Allen & Hamilton did a study for the Solar Energy Industries Association, American Wind Energy Association, and Renewable Energy Institute. It stated: “The private sector can be expected to develop improved solar and wind technologies which will begin to become competitive and self-supporting on a national level by the end of the decade [i.e. by 1990] if assisted by tax credits and augmented by federally sponsored R&D.”(Renewable Energy Industry, Joint Hearing before the Subcommittees of the Committee on Energy and Commerce et al., House of Representatives, 98th Cong., 1st sess. 1983)
1984 – Christopher Flavin of the Worldwatch Institute: “Tax credits have been essential to the economic viability of wind farms so far, but will not be needed within a few years.” (Christopher Flavin, “Electricity’s Future: The Shift to Efficiency and Small-Scale Power,” Worldwatch Paper 61, Worldwatch Institute, 11/84)
1985 – Christopher Flavin of the Worldwatch Institute: “Although wind farms still depend on tax credits, they are likely to be economical without this support within a few years.” (Christopher Flavin and Cynthia Pollock, “Harnessing Renewable Energy,” in Worldwatch Institute, State of the World 1985)
1985 – “Wind Energy Cannot Only Become Competitive, But Will In The 1990’s Be One Of The Cheapest Sources Of New Power.” “While wind power cannot yet deliver electricity at costs competitive with other energy sources – some experts estimate that it may cost anywhere from 9 to 12 cents a kilowatt-hour, as opposed to the 7-cents-a-kilowatt-hour cost of oil and gas -proponents point to a recent study by the Electric Power Research Institute of Palo Alto, Calif., a research group financed by electric utilities. That study indicated that wind energy cannot only become competitive, but will in the 1990’s be one of the cheapest sources of new power.” (Barry Fisher, “The Threat To Wind Energy,” The New York Times, 10/26/85)
1986 – Christopher Flavin of the Worldwatch Institute: “Early evidence indicates that wind power will soon take its place as a decentralized power source that is economical in many areas…. Utility-sponsored studies show that the better wind farms can produce power at a cost of about 7¢ per kilowatt-hour, which is competitive with conventional power sources in the United States.” (Christopher Flavin, “Electricity for a Developing World: New Directions,”Worldwatch Paper 70, Worldwatch Institute, 6/86)
1986 – Amory Lovins of the Rocky Mountain Institute lamented the untimely scale-back of tax breaks for renewable energy, since the competitive viability of wind and solar technologies was “one to three years away.” (Lovins, K. Wells, “As a National Goal, Renewable Energy Has An Uncertain Future.” Wall Street Journal, 2/13/86)
1986 – A representative of the American Wind Energy Association testified: “The U.S. wind industry has … demonstrated reliability and performance levels that make them very competitive. It has come to the point that the California Energy Commission has predicted windpower will be that State’s lowest cost source of energy in the 1990s, beating out even large-scale hydro.”(Statement of Michael L.S. Bergey, American Wind Energy Association in Renewable Energy Industries, Hearing before the Subcommittee on Energy Conservation and Power of the Committee on Energy and Commerce, House of Representatives, 99th Cong., 2nd sess. 1986)
1990 – In 1990, two energy analysts at the Worldwatch Institute predicted an almost complete displacement of fossil fuels in the electric generation market within a couple decades [i.e. 2010]: “Within a few decades, a geographically diverse country such as the United States might get 30 percent of its electricity from sunshine, 20 percent from hydropower, 20 percent from wind power, 10 percent from biomass, 10 percent from geothermal energy, and 10 percent from natural-gas-fired cogeneration.” (Christopher Flavin and Nicholas Lenssen, Beyond the Petroleum Age: Designing a Solar Economy, Worldwatch Institute, 1990)
1991 – Dale Osborn, Former AWEA President: “The Wind Industry Could Produce, At Competitive Prices, Up To One-Third Of The Nation’s Electricity Needs Within The Next 30 Years.” “‘Here we go again. Nuclear, coal and oil appear to be receiving all the benefits, while clean, proven energy technologies like wind are receiving little serious attention,’ said Dale Osborn, president of the California-based company, U.S. Windpower, and president of the American Wind Energy Association. ‘Given an equal opportunity to compete fairly, the wind industry could produce, at competitive prices, up to one-third of the nation’s electricity needs within the next 30 years.’” (“Bush Administration’s Energy Plan Represents Another Missed Opportunity For America, Says U.S. Windpower,” PR Newswire, 2/20/91)
1991 – “Wind Power Will Be Cheaper Than Conventional Power By 2000.” “’Wind power will be cheaper than conventional power by 2000 when strides in engineering will have made windmills even more economically competitive,’ said Paulus Soullie, a windmills engineer at Holland’s Energy Research Centre in Petten. A windmill with a record 1.3Mw output will be built later this year in Holland.” (Peter Spinks, “Charm Of The Farm Goes With The Wind,” The Observer, 1/13/91)
1996 – Christopher Flavin, President of WorldWatch Institute. “Following the laws of technological progress and large-scale manufacturing, the cost of wind-generated electricity has fallen by more than two-thirds over the past decade, to the point where it is lower than that of new coal plants in many regions. Within the next decade, it is projected to fall to 3 to 4 cents per kilowatt-hour, making wind the least expensive power source that can be developed on a large scale worldwide.” (“Power Shock: The Next Energy Revolution.” WorldWatch, January/February 1996)
1998 – Ken Lay, former CEO of Enron, to Gov. Bush in 1998. “The bill, H.R. 1401 (Thomas R-CA), extends for five years the existing wind production tax credit (PTC), which was passed by the Bush Administration in the Energy Policy Act of 1992. Wind is the fastest growing new electrical generation technology in the world today and has rapidly decreased its production costs until it is close to being competitive with conventional generation technologies.” (“Enron’s Ken Lay asks for Texas Gov. Bush’s help in securing tax credits for wind.” National Wind Watch, 9/10/2008)
1999 – A DOE Assistant Secretary Said Wind Power Is Getting Close To Being Competitive With Wholesale Power. ‘”Although wind power is not yet competitive with wholesale power, it’s getting close… ‘Of all the renewable technologies, wind power is the closest to market competitiveness today. When you consider the improved technology the opportunity for consumers to choose green power, and the concerns over climate change, it all adds up to a strong potential for wind to really take off over the next 20 years.’” (Taylor Moore, “Wind Power: Gaining Momentum,” EPRI Journal, 12/22/99)
2001 – Robert Boyd, Enron Wind Corp. VP: “With Additional R & D Funding And The Continuation Of The Production Tax Credit For The Next Five Years Wind Should Become Price Competitive With Conventional Generation Technologies.” “Wind energy is close to becoming competitive with conventional fuels. With additional R & D funding and the continuation of the Production Tax Credit for the next five years wind should become price competitive with conventional generation technologies.” (Robert T. Boyd, Committee On Finance, U.S. Senate, Testimony, 7/19/01)
2003 – Senator Chuck Grassley (R-IA) on the PTC. “I’d say we’re going to have to do it for at least another five years, maybe for 10 years. Sometime we’re going to reach that point where it’s competitive (with other forms of energy). I think the argument for any tax credit is to make the new source of energy economically competitive.” (“Wind Energy Rides Roller Coaster Year.” Electrical Wholesaling, 4/1/03)
2004 – Experts Said in 2004 Wind Was “Getting Close” To Viability And “Very Nearly Competitive.” “Not long ago wind power was the domain of fringe scientists and environmentalists…. But the industry is maturing and growing quickly–and is beginning to find its place as one viable element in the energy puzzle. … Still, says Bob Thresher of the Department of Energy’s National Renewable Energy Lab, ‘wind is the first renewable technology that is very nearly competitive in the market for bulk power generation.’ … [Wind pioneer Jim] Dehlsen says the cost of wind needs to fall below three cents per kilowatt hour–without tax credits–to truly break society’s addiction to fossil fuels. “It’s still not there, but we’re getting close,” he says.” (Brad Stone, “The Master of Wind,” Newsweek, 9/20/2004)
2004 – Edward Berkel, Senior VP Shell WindEnergy: “Cost Reductions Will Eventually Make Wind Fully Competitive With CCTG Power.” “Cost reductions will eventually make wind fully competitive with CCTG power. If PTCs are not replaced other mechanism might be used, i.e. green certificates. Driven by customer needs, overall world pressure to reduce GGEs.” (“Where’s The Bill?” Project Finance, 3/2004)
2006 – A Former FERC Chairman Said The Wind Industry Will Be Eventually Be Able To Survive Without Subsidies. “[Pat Wood, former chairman of the Federal Energy Regulatory Commission (FERC)] said that the high price of fossil fuels make it a ‘pretty safe bet’ that the wind energy industry will eventually be able to survive without government subsidies in the form of the wind production tax credit.” (Suzanna Strangmeier, “Former FERC Chairman Pat Wood Sees Bright Future for Wind Power,” Oil Daily, 5/2/06)
2012 – Denise Bode, Former AWEA CEO on PTC Phase-out. “In coordination with any phase down of the credit, we would urge Congress to consider additional policy mechanisms to encourage a diverse portfolio that includes renewable energy. With the policy certainty that accompanies a stable extension, the industry believes it can achieve the greater economies of scale and technology improvements that it needs to become cost competitive without the PTC.” (AWEA letter to Congress. 12/12/12)
2012 – Secretary of Energy Steven Chu: “I think it’s something the wind industry sees: “As the technology gets better, there’s no need to be subsidizing a competitive industry once it’s competitive.” “So over a period of time, especially as — and no dates were discussed — but over a period of time, a road map of phasing out, you see where the prices are going and you can see” how to eliminate the credit…. Just as eventually VEETC and other things were eventually phased out, I think it’s something the wind industry sees: As the technology gets better, there’s no need to be subsidizing a competitive industry once it’s competitive,” (“Chu opens the door to phaseout of wind incentive.” Governors’ Wind Energy Coalition, 3/15/12)
2014 – Warren Buffett on how wind isn’t profitable without subsidies. “I will do anything that is basically covered by the law to reduce Berkshire’s tax rate,” Buffet told an audience in Omaha, Nebraska recently. “For example, on wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.” (U.S. News & World Report, 5/12/14)
2015 – Senator Chuck Grassley on (yet another) PTC extension. “But, I also know this credit won’t go on forever. It was never meant to, and it shouldn’t. In 2012, the wind industry was the only industry to put forward a phase out plan. I have expressed support in the past for a responsible, multi-year phase out of the wind tax credit. But, I believe any phase out should be done in the context of comprehensive tax reform, where all energy tax provisions are on the table.” (Senator Grassley letter to Chairman Hatch, 7/7/15)
Conclusion
The American Wind Energy Association surely knew in 2015 that their claims about wind being cost competitive were untrue. Without the PTC, no one would build wind turbines. As Warren Buffet said, “On wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.”