High Cost of Renewable Energy Subsidies

From Texas Public Policy Foundation.

"Texas’ Role as Nation’s Leading Wind Generator was Driven by Taxpayer-funded Subsidies

AUSTIN – Today, the Texas Public Policy Foundation released the paper “Texas Wind Power Story: Part 1 – How Subsidies Drive Texas Wind Power Development,” which shows that the growth of the wind industry in Texas is spurred by – and only viable because of – subsidies such as the production tax credit, along with tax breaks at the state and local level.

"The research looks past the popularized benefits of wind power and raises important questions about how an industry, so reliant on public funding, will respond when the subsidies reach their scheduled end," said Lisa Linowes, the author of the paper and a senior fellow at TPPF.

U.S. wind energy development is heavily reliant on public subsidies and the Texas market is no different. Chapters 312 and 313 tax abatements constitute the largest portion of state subsidies being granted today. Fifty percent of the active Chapter 313 agreements involve wind energy facilities with a lifetime total cost of $1.56 billion as of 2016. Federal subsidies including the wind production tax credit and depreciation combined represent more than 50 percent of the capital cost of a typical wind farm. The pending expiration of the production tax credit after 2019 has fueled an aggressive race to erect as many turbines as possible.

“Renewable energy subsidies have cost Texans more than $13 billion since 2006,” said Bill Peacock, TPPF’s vice president for research. “But even more than that, they have harmed people and wildlife through the proliferation of wind turbines that never would have been built if not for the subsidies. Wind and solar generation are inefficient and simply can’t compete in the energy marketplace without subsidies. Texas policymakers need to be proactive in deciding how the next decade of energy policy will unfold." 

Texas has witnessed a boom in wind energy development over the past 15 years that put the state on the map as a leader in renewable energy. The state remains attractive for further development due to the federal subsidies and public-funded infrastructure expansion. But the expansion of wind power has placed a strain on the reliability of the state's delivery system. 

To view or download the report, click here:

https://www.texaspolicy.com/content/detail/texas-wind-power-story-part-1"