GOP Budget OKs Billions for Wind, Solar Power Subsidies

Wind Turbines sunset
Rich Tucker

The Republican budget agreement renews multi-billion dollar subsidies for wind and solar power. The subsidies were scheduled to expire at the end of this year.

Rather than simply allow the fiscal-drains to expire, Republicans have renewed them for five years. According to the Republican plan, the subsidies would phase out and expire in 2022.

The wind power subsidies were first enacted as a temporary boost to the fledgling industry in 1992. For 23 years, the federal government has been subsidizing the construction of wind and solar facilities, with no end in sight. In fact, the wind power subsidy, because it is an open entitlement, has been increasing in cost.

Last year, the wind power subsidy cost federal taxpayers $12 billion. This is more than double the historical average of $5 billion a year. The subsidy provides a direct payment to wind and solar producers, based on the amount of power they produce. For wind power, the subsidy is worth around $23 per megawatt of power, around half the wholesale price of electricity.

The hand-out to wind farms can be even more generous when state and local tax credits are factored in. Despite more than two-decades of promises, the wind power industry seems to be wholly dependent on the federal subsidy to even exist.

According to a report commissioned by the wind industry itself, wind power generation is particularly dependent on the federal subsidy. With current subsidies, the wind industry is expected to provide 8 GW of power across the US. Without the subsidy, power generation from wind would fall to 2 GW of power.

Warren Buffett, a big investor in wind power, admitted the industry’s reliance on the federal subsidy. “[O]n 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.”

While the 23-year subsidy for wind has enriched investors like Warren Buffett, it has done little to rebalance America’s energy supply. Despite the tens of billions in subsidies, wind power provided just 1.6 percent of the US energy needs last year.

Republicans got a lot of political mileage capitalizing on the high-profile bankruptcies of subsidized firms like Solyndra, a solar power company recipient of hundreds of millions in federal subsidies. Solyndra, however, was simply the weakest of dozens of firms around the country dependent on federal subsidies for existence.

No industry, in any field, should need permanent federal subsidies to survive.

In exchange for extending yet again the federal subsidies for wind and solar power, Republicans won Democrat approval for a measure to lift the ban on selling American oil overseas. The ban on oil exports was certainly a misguided policy, but lifting the ban at a time that the price of oil is hitting historic lows and markets are experiencing a world-wide glut in the supply of crude borders on meaningless.

There are currently millions of barrels of oil sitting on tankers in the ocean, waiting for a place to dock, because storage facilities are full. Only Republicans in Congress would think the ability to sell into an already saturated market would be worth billions more in tax subsidies.

The renewal of the wind and solar subsidies is a major win for Democrat lawmakers. The party has found that in the minority, it may not have the trappings of power, but it can still enact its policies.


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