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Wind and Solar Energy: A Bad Deal for Taxpayers


Posted by Chris Prandoni on Tuesday, October 26th, 2010, 4:01 PM PERMALINK


[PDF Document]

The wind and solar industry, politicians, and environmentalists have spent the past decade perpetuating the belief that these sources of energy are cost-free and investment in this sector would result in job growth. Contrary to this narrative, wind and solar are less efficient, more expensive sources of energy whose implementation is predicated on government mandates and subsidies.

Energy costs

Wind and solar, at this point in time, are significantly less efficient than coal—the most common source of energy in the US:

Cost per megawatt hour

  • Coal power—$78.10
  • Onshore wind power—$149.30
  • Offshore wind power—$218.00
  • Thermal solar power—$256.50
  • Photovoltaic solar power—$396.10

Tax Credits

The federal government facilitates wind production by providing a $0.022 production tax credit for each kilowatt-hour of electricity produced by wind. Similarly, individuals may employ a 30 percent individual tax credit to alleviate installation costs. These tax credits should be repealed and replaced in a revenue neutral way as this is bad energy policy.

State Mandated Renewable Portfolio Standard (RPS)

Twenty-seven states have implemented Renewable Portfolio Standards which require a percentage of a state’s energy to be derived from wind or solar. An RPS effectively forces consumers to buy wind and solar power artificially raising the cost of their energy bills. There have been ample proposals to create a national RPS, usually referred to as a Renewable Electricity Standard (RES).

Effects of a national RES

If states are forced to use more expensive sources of energy for production, transportation, and everyday consumption, American families will see their energy bills rise and their disposable income fall. The Heritage Foundation found that a 35 percent federal RES would:

  • Raise electricity prices by 36 percent for households and 60 percent for industry;
  • Reduce the income for a family of four by $2,400 per year
  • Reduce Gross Domestic product by $5.2 trillion between 2012 and 2035
  • Reduce employment by more than 1,000,000 jobs

Conclusion

State governments create artificial demand for solar and wind energy that is then subsidized by the federal government. Tax credits should be repealed and replaced in a revenue neutral way and RPSs eliminated. Doing so would alleviate taxpayers from the burden of unnecessarily inflated energy bills.

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