Posted on 02/15/2012 11:26:59 AM PST by bigbob
Hopes that a near-term extension of the production tax credit (PTC) for wind power would be included in legislation to extend the payroll tax cuts through the remainder of this year are nearly extinguished, as NAW has learned that congressional leaders have reached a tentative framework agreement on the payroll tax cut - but it does not contain a PTC extension.
A House-Senate conference committee is expected to approve the deal, which will then go to the House and Senate as soon as today. Sources, who wished to remain anonymous, told NAW that both legislative bodies are expected to quickly sign the measure before congressional leaders depart for the President's Day recess that begins Feb. 20.
The omnibus bill extends the payroll-tax holiday and unemployment insurance through the end of the year and allows doctors to fully claim Medicare reimbursements - a measure that addresses the so-called “doc-fix.” Those provisions would be paid for with reductions elsewhere in the budget.
However, the bill does not include tax extenders such as the PTC, which, for wind power, expires at the end of this year.
The conference committee, which comprises party leaders and representatives from the House Ways and Means Committee and the Senate Finance Committee, had been meeting for more than two weeks to reconcile the key components of a payroll tax extension, which expires Feb. 29.
According to sources familiar with the negotiations, Democrats attempted to include the PTC in the negotiations, but talks broke down when Republicans tried to get Democrats to soften their stance on reducing hazardous air pollutant emissions from existing and new boilers and commercial and industrial solid-waste incinerators.
The news dealt a crushing blow to the American Wind Energy Association (AWEA), which had hoped that near-term legislative action connected to extending the payroll tax cut was the best vehicle to quickly pass the PTC extension.
According to AWEA, PTC action is urgent, because once the presidential campaign begins in earnest, the focus will be on campaigning, rather than on legislative matters.
Now that a near-term strategy is severely weakened, the wind industry must look to other ways that a PTC extension could be passed this year, such as in a lame-duck Congress following the November general election.
Peter Kelley, AWEA's vice president of public affairs, said the situation is still developing.
"There are a number of options, and nothing is final yet," he told NAW, noting that a bipartisan group in Congress is continuing to provide leadership in extending the PTC for wind energy.
Several options are under discussion, Kelley said, and both Democrat and Republican congressional leaders are working on legislation.
However, "It's too soon to say what they'll come up with,” he added. “They're looking at every opportunity to get this done in the first quarter, because they realize the urgency of keeping the tens of thousands of U.S. manufacturing jobs that are on the line.”
In an interview with NAW last month, AWEA’s vice president of public policy, Robert Gramlich, said that any fallback position would be far less effective.
"History shows us that it is hard to move policy in the summer and fall of an election year," he said.
Incidentally, wind is far cheaper (more than 5 cents per kWh than electricity generated by burning our domestically produced natural gas in a gas turbine. However this makes sense because GTs produce the most valuable power needed to supply peak demands when the price of electricity is the highest.
Really?
Please help us understand why there are more than 14,000 windmills now abandoned in place, across the U.S.?
That’s because they were the oldest, smaller ones installed that never did make economic sense, and since the laywers hadn’t remembered to put removal clauses in the contracts, it was cheaper for developers to just abandon them in place than to remove them.
Not much different than why we have so many abandoned gas stations with leaking underground tanks that now must be removed at public expense.
I am not pro-wind in all aspects, “small wind” that you see at homes and farms for example, makes absolutely no sense and will never have a payback, and should not be subsidized. It is through incentives like PTC that the GEs, Suzlons, Simeens, Mitsubishis, et al had access to a large enough market that made them willing to invest in the R&D needed to scale up and find the right cost point. Just as airline subsidies helped Boeing and Airbus create the most fuel-efficient aircraft and the airlines design the best route system rather than trying to fly puddle-jumpers into tiny airports. Economy of scale.
$0.125 per KWH? Not so fast.
Much nat gas is burned in combined cycle plants, with 50% conversion to electricity. Many coal plants are lucky to hit 35% conversion.
Nat gas is down to $2.50 per million BTUs, implying a fuel cost of 2.56 cents per KWH at the buss bar at 40% efficiency. Throw in two cents capital and O&M and you have equivalent to coal / nuke cost.
Nat gas plants can operate 90% of the time, spreading out O&M and capital costs.
Wind capacity factor: 25%. This adds hidden capital and O&M to the cost down the line.
When wind flows, other plants on the grid have to shut down; increasing thier cost basis as you don't furlough mechanics and operators during periods waiting for the wind to stop again.
This cost has to be added into the overall picture.
False. Wind projects with a low projected net capacity factor of 25% don't get built these days. Most wind farms these days are well in excess of 35% and some in the Midwest are at 50%. Because the PTC is a production based incentive, turbine manufacturers have been incentivised to maximize energy production and ensure the turbines keep producing.
There are no "hidden capital and O&M costs down the line." They are very accurately quantified in each wind farm's financial forecast prior to construction to ensure the investor's target return is achievable.
Wind energy is not the be-all end-all energy solution for America, but it makes sense where it's windy. Congressional failure to renew the PTC is simply that, a failure.
Don’t worry the PTC subsidy will be extended. GE wants it and will happen.
I espcially like the part where governors mandate that utilies provide “10% of their energy from renewable sources”.
Which means that whent the wind doesn’t blow and the sun doesn’t shine, they must back it up with gas fired facilities, but bookkeep it to the “renewable” column.....
I dispute your cost numbers, but even if they were accurate, by your own admission, it is 67% more expensive to provide a kilo watt hour using wind compared to nuke and coal {which you have lumped together to raise the cost of coal provided electricity}.
After subsidies from the tax payers the fake gap is now 13% higher.
These lost jobs should be lost, they are not really producing anything of value, they are as productive as a federal bureaucrat.
If tax payer money is required to support a "private" company, then that company should go bust.
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