Part Two of a Series: Subsidies

By Gordon HopkinsAs Jefferson County Commissioners await recommendations from the Planning and Zoning Committee for regulating wind farms, the campaign on both sides of the controversial subject is continuing. A number of issues have been brought up in the public debate about the future of wind energy in this county. One of those issues is the role government subsidies plays in the production of wind power.A subsidy is a benefit given by the government to groups or individuals, usually in the form of a cash payment or tax reduction. Purposes of subsidies may be to encourage production, the development in a particular area, such as renewable energy, or to keep consumer costs down. The Village Board of Jansen held a meeting to discuss wind farms in Jefferson Count on Tuesday, April 5, 2022. One attendee, Leonard King, said, “So I went online and I type in who receives the most government subsidies. And guess who the first three names that come up? Energy, Agriculture, Transportation. So, what are we talking about here tonight? We’re talking about subsidies. We’re talking about money. These people have been telling us about what all they’re going to do. Giving us all this money. Whose money are they giving? They’re giving us back part of our money.”King said, “They can talk about all the stuff they’re giving away to schools and whatnot, but they’re just given away subsidies.” Jefferson County Commissioner Gale Pohlmann was in attendance. After the meeting, he told FJN, “He (King) was correct in that the wind farms are one of the major areas receiving these government payments, and we as federal taxpayers are paying for these subsidies.”Pohlmann said, “After returning home I realized that I should have made the comment to the group that we as taxpayers pay these subsidies for all the wind turbines in Iowa, Illinois, Wisconsin, etc., and they are receiving all the income from them! So we are paying regardless of where they are located, but if we had the turbines here we would have the ability to generate some income to offset our federal tax dollars we spend for those subsidies.”Who Gets Subsidies?There is currently one wind farm in the county, Steele Flats Wind Farm near Diller. That farm is owned and operated by NextEra Energy Resources, which hopes to build a second, Big Blue Wind.Matthew Jones, project developer for NextEra, attended the meeting and answered questions. Jones pointed out, “The entire industry is subsidized. It’s like agriculture, just like gas and oil, just like nuclear. It’s like everything that relates to national security.”“We have nuclear power. We’ve got gas power. We’ve got natural gas,” Jones added, “Because every source of energy is subsidized.”“Did I ask about your nuclear power?” King asked, “So what we got going here is, you’re taking our money, and you guys are splitting it up between yourself, handing us back a dollar bill and telling me how great you are.”After the meeting, FJN contacted NextEra spokesperson Sara Cassidy, who told FJN, “Fossil fuel plants in their start-up period received five times more in government incentives compared to incentives paid to renewable energy developers and owners.”FJN has not independently verified that figure.Production Tax CreditThe primary form of subsidy that wind energy receives from the government is not a direct payment but a tax credit, known as the Renewable Electricity Production Tax Credit (PTC). It is dependent on how much electricity is produced. According to the EPA (Environmental Protection Agency), the PTC is a per kilowatt-hour (kWh) federal tax credit included under Section 45 of the U.S. tax code for electricity generated by qualified renewable energy resources. Other forms of energy also receive this tax credit. The EPA reports, “PTC provides a corporate tax credit of 1.3 cents/kWh for electricity generated from landfill gas (LFG), open-loop biomass, municipal solid waste resources, qualified hydroelectric, and marine and hydrokinetic (150 kW or larger). Electricity from wind, closed-loop biomass and geothermal resources receive as much as 2.5 cents/kWh.”However, the PTC began phasing out in 2017. The EPA notes, “The PTC is phased down (40 percent) for wind facilities and expires for all renewable energy technologies commencing construction after December 31, 2021.”Republican U.S. Senator Chuck Grassley of Iowa is referred to by some (including himself) as the “father” of the wind energy tax credit. When discussing a possible extension of the PTC, Grassley said, “As the father of the first wind energy tax credit in 1992, I can say that the tax credit was never meant to be permanent. I also can say that the wind energy industry is the only energy industry that came forward with a phase-out plan. The oil and nuclear industries have benefited from tax incentives that have been permanently on the books for decades.”Cassidy told FJN, “The PTC phases out for wind projects that start construction after 2021. In June 2021, as part of a response to COVID-19 and recognizing the challenges of completing construction projects during this time, the IRS issued guidance that permits wind projects that began construction between 2016 and 2019 with six years to complete construction and wind projects that began construction in 2020 with five years to achieve their in service dates and qualify for the applicable credits.”Can Wind Farms Succeed Without Subsidies?There has been a great deal of debate about whether or not wind farms can be financially successful without the help of government subsidies. Jones insisted that NextEra could survive and still be profitable without government subsidies.King asked, “Why do you take your subsidies, if you’re on your own, if you can exist on your own?”Jones responded, “If that structure is in place for you, and you had a business, you wouldn’t take something like that?”Jones added, “We have to stay competitive.”After the meeting, FJN asked Cassidy if the company could survive without subsidies. Cassidy pointed out, “The cost of wind generation is very competitive. Once turbines are installed, the cost of generating wind power will remain steady for decades because the cost of the fuel – wind – is free.”Cassidy also noted, “According to the U.S. Department of Energy, the cost of deploying wind energy has decreased more than 90 percent since the early 1980’s and by nearly 70 percent in the past decade.”What Happens NextCounty Commissioners requested that the Planning and Zoning Committee review wind farm regulations in response to changing technology. A moratorium on new wind turbine permits is in place until April 1, 2023, although commissioners do have the option of ending the moratorium sooner. Commissioners have noted that, because most of the Planning and Zoning Committee members are in the ag business, further public hearings about the regulations are not likely to occur until at least August due to the planting season.

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