Tax credit helps wind power and the economy

It appears that Christine Hanson is at it again with her recent attack on wind power on behalf of Americans for Prosperity, a group whose funding comes from energy industries which compete directly with wind.

Unsurprisingly, the misinformation  Hanson and her organization have spread concerning the wind energy Production Tax Credit (PTC) walks hand in hand with the typical agenda-fueled rhetoric we hear from other special-interest groups. When the facts are on the table, however, we find a very different story than the one presented by Hanson.

The Production Tax Credit attracts and helps sustain a steady flow of private investment into the wind industry — as much as $25 billion in 2012, with an average of about $17 billion annually. Although those are already impressive figures, the addition of lease payments to landholders who host turbines, as well as taxes paid to state and local authorities, mean that the PTC easily pays for itself, helping create jobs in the process and boosting budgets for further economic development in rural areas. With 559 wind-related manufacturing facilities now in the U.S., we have increased the domestic content of our turbines from 25 percent to over 70 percent. Wind power is made in America.

The PTC, as its name suggests, only rewards actually producing power, so although projects may qualify, the benefit they receive depends on the amount of electricity they generate. That means developers must subject themselves to the same rigorous siting and evaluation procedures expected of any business, encouraging efficient placement of turbines and continued innovation in terms of efficiency and getting wind energy onto the grid.

The federal tax code is the de facto energy policy in the United States, and no form of utility-scale generation has ever gone without public support. Furthermore, wind, unlike its contemporaries in the energy sector, has managed to fight through four expirations of its tax credit, events that inject chaos into the market and threaten the stability of thousands of American jobs.

Diversity is important in any energy mix, and wind power has proven itself an important part of the national portfolio, hedging against the volatility of fuel prices and helping secure permanent carbon dioxide reductions by displacing electricity from older plants that are becoming increasingly uncompetitive. A stove-pipe energy policy, where only a few forms of generation are allowed to compete on the market, puts all of our energy eggs in a small basket and threatens the security of the utility system. The addition of wind power, reliable, predictable and fuel-free, helps to ensure the necessary diversity to keep our power mix healthy and efficient.

The wind power industry has shown that it can compete with more traditional forms of generation, with the Energy Information Agency reporting its increasing cost-effectiveness – second only to natural gas – as a phenomenon that looks increasingly permanent. Wind power is affordable, and with the proper policies in place to give the industry a little certainty, costs will surely continue to go down as it gains in efficiency and scale. Since 2008, contract prices have dropped 43%, largely due to advancements in the technologies used to make wind power.

If members of Congress are serious about creating jobs, then they are smart to support the Production Tax Credit as a market-based incentive that attracts billions in private investment, diversifies our national energy portfolio, secures reductions in carbon emissions, and provides valuable jobs to support our recovering economy.

Salerno is chief economist for the American Wind Energy Association.