Republicans in the U.S. House of Representatives recently took a step toward ensuring Americans have access to affordable electricity at the flip of a switch, by proposing as part of their tax reform package to reduce the wind Production Tax Credit from its current rate of 2.3 cents per kilowatt hour of electricity produced to 1.5 cents.
Unfortunately, some Senate Republicans, including Chuck Grassley of Iowa, seem to favor policies that make our electricity system more expensive and less reliable and incentivize ineffective state-level policy in the form of renewable energy mandates.
Wind and solar receive more federal subsidies than any other form of energy. In 2013, the federal government shelled out $5.9 billion to owners of industrial wind turbines and $5.3 billion for solar producers. In stark contrast, oil, coal and natural gas received just $3.4 billion combined in tax credits.
There are two main subsidies for renewable energy: the wind PTC discussed above and the solar Investment Tax Credit, which provides a 30 percent tax credit for those who purchase and install solar energy systems. Without these generous subsidies, very few wind or solar installations would be built, because generating electricity from wind or solar is much more expensive than from conventional power plants.
Contrary to the common misconception that wind and solar are able to generate affordable electricity because they have no fuel costs (the wind and sunlight are free), electricity generated from wind is 2.5 times more costly than generating electricity from existing coal, nuclear and natural gas power plants, and solar is 3.5 times more costly. The subsidies paid to the owners of wind and solar systems hide the true cost of these expensive sources of energy and cushion states from the negative consequences of their detrimental policies mandating the use of renewable energy.
Twenty-nine states and the District of Columbia currently have in place some form of renewable energy…