"The U.S. Congress recently passed a massive spending bill that includes $35 billion in energy research and development programs,
a two-year extension of the Investment Tax Credit (ITC) for solar
power, a one-year extension of the Production Tax Credit (PTC) for wind
power, and an extension through 2025 for offshore wind tax credits.
...
The wind and solar industries claim that utility-scale solar and wind
power is already cost-competitive against coal-fired power across the
world and with natural-gas-fired power in many markets and yet both industries act like they need the tax credits to exist.
Despite
billions of dollars in subsidies and state mandates requiring them,
wind and solar power provided less than 10 percent of the nation’s
electricity in 2019.
The solar and wind industries ... were
unable to obtain a “direct-pay” provision to allow tax credits to be
converted into direct payments from the federal government ... (which)
would have allowed companies who do not pay taxes to get direct cash
payments.
Currently companies must have a tax obligation to receive the credit against taxes owed.
The
two-year extension of the federal Investment Tax Credit (ITC) for solar
projects will retain the current 26 percent credit for projects that
begin construction through the end of 2022, rather than expiring at the
end of 2020.
The ITC will fall to a 22 percent rate for projects
that begin construction by the end of 2023, and then fall permanently
to 10 percent for large-scale solar projects and to zero percent for
small scale solar projects in 2024.
Many of the large-scale solar
development set to be completed through 2023 used “safe-harbor”
provisions to secure the original 30 percent ITC credit.
... The Production Tax Credit (PTC) for wind power projects,
usually claimed by onshore developers, will remain at 60 percent for
projects that begin construction by the end of 2021, rather than being
reduced to 40 percent as called for in previous law. The PTC will be
reduced to zero starting in 2022.
... The new ITC rules will
allow offshore wind projects to retain access to a full 30 percent
credit paid by taxpayers for projects that begin construction through
2025.
... According to a December 21 estimate from the Joint
Committee on Taxation, the extension of the ITC for solar will cost the
American treasury another $7 billion between now and 2030.
The extension of the wind industry’s PTC will cost another $1.7 billion.
The tax credit extension for offshore wind will cost an additional $362 million.
Those
billions will be added to the $27 billion in ITC tax credits that were
already designated for the solar sector and $34 billion in PTC that will
be collected by the wind industry between now and 2029, according to
the Treasury Department.
... While wind and solar have risen steadily, they still only comprised 7.4 percent and 2.3 percent, respectively, of U.S. net generation in 2019.
Dividing
total federal subsidies from 2010 to 2019 by total electricity
generated provides the cost of the subsidies to taxpayers per unit of
electricity produced.
...
Between 2010 and 2019, the American solar industry got roughly 211
times as much in federal tax incentives as the oil and gas sector, when compared by the amount of electricity produced.
And the wind sector received 48 times as much as the oil and gas sector.
... when comparing the dollars per unit of electricity produced, that comparison shows that the subsidies
given to hydrocarbons and nuclear are dwarfed by the amount of federal
taxpayer cash that is being handed to the wind and solar sectors.
...
Since much of the material relating to wind and solar photovoltaic
generation are imported, the shift to these sources means more
dependence on foreign nations for our energy and less energy
independence, which the United States reached in 2019 for the first time
since 1957.
The PTC and ITC have been in place since 1992.
Since 2010, the cost of onshore wind has dropped 40 percent and the cost of solar has dropped 80 percent.
If
neither industry can be economic without the ITC and PTC provided to
them by the federal government – and thus the American taxpayer – it
should be time to reevaluate them as viable energy sources.
... Congress seems as addicted to supporting them as the industries themselves appear addicted to taxpayer handouts."
