With Wind It's Always Boom or Bust

With Wind It's Always Boom or Bust
With Wind It's Always Boom or Bust

The wind energy lives and dies by its tax credit. That's because there is no money to be made in generating electricity from windmills. They are tremendously materials intensive, consuming steel and concrete in prodigious amounts. Each 40-story windmill produces 2 megawatts at best, so you need hundred of them to equal a conventional power plant. Even then, they generate unpredictably and only 30 percent of the time. The only thing that makes them worth building is the production tax credit.

But the PTC makes them VERY worthwhile to businesses looking for tax write-offs. Before it went bankrupt in 2003, Enron was the country's largest owner of windmills. Later it was supplanted by the Marriott Hotel chain. A major corporation looking for tax advantages can make money from windmills without ever generating a kilowatt of electricity.

So when Congress fails to renew the tax credit, the industry collapses. This is indicated on the bar chart. Before 2005, the renewal was on a one-year cycle. When Congress failed to renew in 2000, 2002, and 2004, production fell by at least 73 percent each time. In 2005 the PTC was extended to a two-year cycle and was last renewed in the Stimulus Act of 2009. With Republicans now in control of the House of Representatives, however, the PTC will probably not be renewed unless Democrats achieve a remarkable victory in November. As a result, windmill construction is about to end almost completely. Layoffs have already begun.

The wind industry says the situation could be resolved by putting the PTC on a permanent basis, such as the ethanol industry has achieved since 1980.

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