A recent Forbes.com column criticized the federal production tax credit (PTC) for renewable energy but ignored that all energy sources receive incentives – even though the column’s authors represent companies that have themselves pursued such incentives.
They also tried to recycle the thoroughly debunked claim that it’s somehow a bad thing that wind energy is producing market-driven benefits for consumers, helping hold down electric bills.
Specifically, their column claimed that by “allowing the PTC to expire last year, Congress took an important step in preventing the government from picking winners and losers in electricity markets.” However, the opinion piece was written by self-described “chief executives at some of the nation’s largest coal, natural gas and nuclear companies,” all of which have pursued government incentives of their own.
For example, one of the co-authors is the CEO of Exelon, which has reportedly asked Illinois state legislators for an out-of-market incentive to keep its nuclear plants open. Exelon is also asking state regulators to approve out-of-market payments, using ratepayer money from the local utility, to keep a nuclear plant open in upstate New York. That proposal has generated significant pushback from the owner of a competing nuclear plant, another clear indication that these battles are really about existing energy sources trying to protect their market share from competition.
Another co-author of the column is from Calpine, which also recently petitioned regulators and received out-of-market payments using ratepayer money to keep one of its gas power plants open because power prices dropped due to the low price of natural gas.
Furthermore, these state incentives are a drop in the bucket compared to the cumulative federal support that has been provided to fossil and nuclear energy. The Nuclear Energy Institute’s own tally of federal support finds $73 billion in federal support for nuclear and $225 billion in support for coal and natural gas over the last 60 years, far more than has gone to all renewable sources combined. All of these incentives affect power markets in the exact same way that the renewable tax credit does – by adding supply to the generation mix.
Wind’s consumer benefits are market-driven. Exelon and its co-authors next attempt to revive a myth that was thoroughly discredited earlier this year. AWEA released a 28-page report in March that comprehensively shot down Exelon’s claims that the renewable Production Tax Credit (PTC) was having an impact on markets or its nuclear plants.
A variety of experts have now agreed that, except for rare and extremely isolated occurrences that have little to no impact on other power plants, the PTC is not reflected in power prices because wind plants almost never set the clearing price in electricity markets. Wind energy does reduce electricity prices by displacing more expensive forms of energy; however, this is an entirely market-driven phenomenon that occurs for all low-cost energy sources, including Exelon’s nuclear plants.
The piece then claims that “federal regulators have also decried the PTC as a source of market distortion.” This is almost certainly a reference to former Federal Energy Regulatory Commissioner John Norris, who had briefly expressed those concerns before receiving evidence about how Exelon had mischaracterized reality, at which point he labeled Exelon’s claims to be a “distraction.”
As the example of these supposed market distortions, the piece claims that wind drove the closure of the Kewaunee Nuclear Power Station in Wisconsin, even though this plant is not located near any wind plants, and its closure was almost universally attributed to low natural gas prices driving it out of the market.
Wind energy has greatly reduced emissions in Germany. The piece concludes by claiming that “In Germany, generous subsidies for wind and solar have driven the closure of clean baseload power plants.” However, the shutdown of Germany’s nuclear plants was entirely caused by the events at the Fukushima nuclear plant in Japan, not at all because of wind energy.
As shown in the following table, wind energy has drastically reduced carbon emissions in many European countries over the last decade, with the countries using the most wind seeing by far the largest declines in pollution.
Wind energy has greatly reduced emissions in Germany, even though a large share of wind’s emissions reductions were masked by the counteracting but unrelated decision to shut down many of the country’s nuclear plants.
Claims such as these should not be taken at face value when they are advanced by companies with a vested interest in defending their market share. American wind power is helping hold down prices for electric consumers, and that’s a good thing.
|Country||Wind % 2001||Wind % 2011||Wind market share gained||
|All OECD Europe||0.8%||5.3%||4.4%||-11.0%|