The American Interest
Analysis by Walter Russell Mead & Staff
Wind Power: Still Buffeted by Free Market Forces

Another blow for the green power: A $1 billion-a-year tax break that has benefitted wind energy producers for years is likely to expire this winter. Bipartisan support has traditionally allowed the measure to be renewed without much struggle, but opponents are now digging in their heels.

This comes at a particularly bad time for the wind industry, which has been wracked by problems, as the NY Times explains:

. . . wind companies have been buffeted by weak demand for electricity, stiff competition from cheap natural gas and cheaper options from Asian competitors. Chinese manufacturers, who can often underprice goods because of generous state subsidies, have moved into the American market and have become an issue in the larger trade tensions between the two countries. In July, the United States Commerce Department imposed tariffs on steel turbine towers from China after finding that manufacturers had been selling them for less than the cost of production.

Wind energy is expensive partially because it involves a number of large, heavy and difficult to transport parts. Tax breaks are meant to help fledgling companies deal with these issues, but even these haven’t been enough to make expensive wind energy viable in the face of foreign competition and a domestic resource boom.

The fact that the industry still cannot stand on its own two feet after several years and several billion dollars is telling. Wind energy has been called the “energy of the future,” and it looks likely to remain so for some time.

Published on September 21, 2012 3:20 pm