01 Dec 2012 Wind Energy - A high cost subsidy for low value power
Subsidies by their nature distort markets and are economically inefficient; the PTC is no exception. However, the magnitude of the PTC subsidy—far larger than any other form of production based energy subsidy3—has especially egregious impacts on wholesale electric markets. The reason is that wind power generates the least amount of power during Summer, when the demand for and value of electricity is greatest, and the most power during Spring, Fall and at night, when the demand for and value of electricity is lowest. Thus, not only does the PTC distort wholesale electric markets by suppressing prices, it also forces consumers and taxpayers to pay billions of dollars each year for electricity that has little economic value and, in many hours, has negative value.4 In essence, the wind PTC is the electric industry equivalent of paying farmers to grow low-value crops and plow under high-value ones.

Subsidies distort competitive markets, drive out unsubsidized competitors, and reduce the incentives to innovate and improve efficiency. Moreover, even if one argued that wind generation was worthy of temporary “protection” when PURPA was enacted, surely after 35 years, the “infant” wind industry is fully grown.