Eliminating the wind PTC once and for all

RenewableEnergyAccess.com is one of my favorite news sites because it focuses on renewable energy projects and developments globally.  It gives me some positive events to focus on in the fight against global warming.  It occasionally has some "Insider" columns, pieces written by industry insiders.  A recent one is by Lyn Harrison, the editor of Windpower Monthly.  It is titled "The Dangers of PTC Addiction," and advocates eliminating it once and for all.

Each time America's Production Tax Credit (PTC) for wind power gets a new lease on life, the negative aspects of doing business under the mechanism are fast forgotten in the ensuing rush of industry euphoria. The PTC ... is as often criticised in private by wind industry leaders as it is praised in public by the lobbyists... To borrow the quietly spoken words of a CEO with two decades in the business: "It's like a drug addiction. We all know it's bad for us. We all know life would be better off without it in the long run. But we can't find a way to get off it." That sense of impotence could be changing.

Jerome a Paris supports keeping and extending the PTC.   At the end of this comment, he makes a call to contact your politician to request extending the PTC.

So, if you have a message to your representatives - tell them to reinstate the PTC - and not just for two years. Give the industry a little bit of time to develop.

Harrison argues that the fact that it has to be extended and renewed by politicians is precisely the biggest weakness of the PTC.  

Instead of being allowed to focus on cost reduction through technology advances and business efficiency, wind industry members spend vast amounts of time and money lining up the next PTC-fix and building PTC leverage strategies. The yearly pressure to rush wind turbines into the ground brings its own set of problems. Among them, little time is left to adequately deal with public fears about visual pollution and harm to wildlife.

She then goes on to argue that this tax credit actually harms entrepreneurship in the wind industry by making it difficult for the little guy to come in and put up a turbine.

The PTC places artificial constraints on who can own a wind farm, narrowing the field to those seeking to cut their taxes, instead of stimulating a spread of investors competing to offer the cheapest equity capital. Even when new investors arrive, the complexity of PTC deals can scare them off. Those who stay need a veritable army of lawyers and accountants to get a PTC deal done. The result is higher transaction costs in America than in Europe...

So, then, what should we do to stimulate wind power in the US?  

Beyond the tax credit, the American Wind Energy Association's policy goal is for specific legislation to create markets for trade in renewable energy credits (RECS). Even partially applied, the legislation works. States which have implemented Renewables Portfolio Standards (RPS) are those seeing most wind power activity today.

According to the AWEA, RPS is when

...a minimum amount of renewable energy is included in the portfolio of electricity resources serving a state or country...

so that your power company is required to source, say, 5% of its power from renewables, increasing to 10% in so many years, and so on.  

There is another emerging paradigm that helps the renewables industry.. cap and trade.  By limiting the amount of carbon, and incentivizing reducing carbon even further, it provides a financial motivation to low-carbon or carbon-free energy production methods.  Already, the Chicago Climate Exchange's market volume make it one of the largest "countries" when compared to the EU countries that participate in their European Climate Exchange.

I would like to advocate to the progressive community and Jerome a Paris that we eliminate our support for the PTC and embrace more forward thinking methods such as RPS and Cap and Trade.  

What do you guys think?

(I've written diaries before, but this is my first serious effort, with formatting, research, and sourcing.  Criticism is welcome, gently please.)

•  Great diary Kermie Thanks. Recommended n/t

  by HoundDog on Fri Jun 16, 2006 at 01:46:59 PM PDT

  •  Thanks.

    My passions are in renewables and carbon sequestration.  I enjoyed putting this diary together.

    by Greenkermie in AZ on Fri Jun 16, 2006 at 01:56:16 PM PDT

•  You make an important point

  We need the field of energy production (using non-carbon, renewable sources) to be busted wide open.

  But we need simple, easy tax-credit carrots for getting some things off the ground.  Let me try to explain what I am thinking. Right now wind farms, etc. are the province of big companies-usually power cos., with their existing power grids and their attendant disorders.  But that may not be the best paradigm.

  When edison developed the light bulb he had to figure out a way to get electricity to enough people to make it commercially successful. So he copied (as most inventors d0) from an existing system, the centralized gas systems for the era's gas lighting. After all you wouldn't want a noisey generator in your home.

  But now we might look at mini systems where each house or cluster has its set of power generating tools locally.

  I read about -- I forget where, (sorry) a co. that is developing small horizontal wind turbines- that is where the blades are horizontal, parallel to the ground, and he is getting high efficiency with relatively low towers.

  Wouldn't it be nice if each (or many) house had its own solar power generator, wind power, and solar hot water heater and was tied into the grid for backup or to sell excess power.

  The beauty of thinking small is that such technology could be exported to deloping countries so that villagers could get electricity without building country wide power grids.

  Biggest problem to be licked is to develop improved batteries for energy storage.
  sam

  by samddobermann on Sat Jun 17, 2006 at 11:34:00 AM PDT