U.S. Rep. Dan Crenshaw, R-Houston, was one of several Texas Republicans blamed for the state strike this month, while millions of Texans crowded into their icy homes.
As with many other Republicans and Conservative experts, Crenshaw pointed his finger at wind energy as the primary culprit. But in a Feb. 16 tweet, Crenshaw extended criticism outside frozen wind turbines to include federal subsidies for the wind industry and “forces the network to rely in part on wind as a power source.”
“Why don’t we have extra gas power when we need it most?” Crenshaw tweeted. “Because years of federal subsidies for wind have caused an over-dependence on wind and an underinvestment in new gas and nuclear power plants.”
“Subsidizing investment in wind has pushed gas and nuclear,” he said.
There is no doubt that wind energy now plays an important role in providing power to Texas and the US. In Texas, the wind has grown over the past five years from supplying 11% of the state’s energy needs to 23%. It is now the state’s second largest energy source after natural gas.
In the US, wind accounted for 7% of total energy generation and was the country’s fourth largest energy source in 2019 after natural gas, coal and nuclear power, according to the latest data available from the US Energy Information Administration.
Bernadette Johnson, an energy economist at Enverus, says it is accurate to say that subsidies for renewable energy have boosted investments in wind energy over the past two decades.
“Those support every major renewable investment in the country,” Johnson said.
But is it true that gas and nuclear energy sources in the US have been ‘ejected’, and that federal wind subsidies are to blame?
Subsidies for the generation of wind, natural gas and nuclear energy
According to a report by the University of Texas Energy Institute in 2018, federal grants support energy generation and infrastructure for all resources. In the 1800s, for example, the federal government leased timber standards and coal deposits to energy companies at very low rates. In the 20th century, various tax policies sought to promote domestic oil and gas production. And in the 1950s, former President Dwight D. Eisenhower’s Atoms for Peace program led billions of dollars in nuclear energy development.
Before the turn of the century, fossil fuel industries accounted for up to 70% of the total cost of energy tax compensation. It was not until 2008 that renewable energy sources became the primary beneficiary of federal aid.
“Where the government first targeted energy production in general, it shifted its spending focus to cleaner carbon sources,” Energy Institute researchers wrote.
In general, subsidies are defined as direct payments by the government to energy producers and measures such as tax cuts.
The most popular subsidy program that benefits wind energy producers is the production tax credit, which was initially introduced in the 1992 Energy Policy Act. Production tax credits reduce the tax burden of a wind producer by a certain amount for every megawatt-hour of energy produced. In 2016, the compensation was set at $ 23 per megawatt hour, although the amount is lower over a ten-year period.
Wind energy producers also benefited from another federal program that reimburses developers 30% of their capital costs instead of a tax credit. The program is known as Section 1603 cash grants. The program was launched in 2009 and distributed $ 25.7 billion to green energy projects before expiring three years later.
Between 2010 and 2013, Energy Institute researchers found that federal wind energy subsidies jumped from $ 5.4 billion to $ 5.7 billion annually, thanks to the Section 1603 grants. However, after the program expired, federal wind subsidies dropped to $ 2.7 billion in 2016, and are expected to climb to $ 4.6 billion by 2019.
Meanwhile, hydrocarbon-based energy producers, mostly including natural gas, also enjoyed their share of federal subsidies – from $ 3.1 billion in 2010 to a projected $ 6.2 billion in 2019, mostly through tax cuts on production. Subsidies for nuclear resources over the past decade have remained relatively stable at about $ 1.3 billion a year.
The amount of energy produced by wind and natural gas sources across the country has both increased. Energy produced by wind turbines has tripled in the past decade, while energy produced by natural gas plants has increased by 60% over the same period, according to federal data.
Nuclear energy, on the other hand, has remained relatively stable over the past ten years at around 800,000 megawatts per year.
Wind subsidies and core investments
Nuclear technology has not attracted significant investment for years, because ahead of time, wind power gained a foothold in the energy market.
According to federal data, no new nuclear generating units have been added in the last two decades – hence the relatively flat production yield of nuclear energy since 2001. Eight nuclear generating units have been retired since 2013.
But the flattened investment curve of nuclear power is not mainly due to the growing emergence of renewable technologies. A report by the U.S. Department of Energy 2017, released under former Secretary Rick Perry, cites cheap natural gas as the “biggest contributor” to the retirement of nuclear and coal plants.
“The production costs of coal and nuclear power plants remained somewhat the same, while the new and existing, more flexible and relatively lower operating costs of natural gas plants caused wholesale prices to fall to the point that some previously profitable nuclear and coal plants were at a loss,” the report reads. of 2017.
The ‘lower variable operating costs’ of renewable resources are listed as one of the three other factors that are putting pressure on the nuclear energy sector. Other challenges include low growth in electricity demand and regulatory costs.
Wind subsidies and investments in natural gas
The boom period for natural gas investments peaked in the early 2000s after energy markets in Texas and elsewhere deregulated and improved natural gas technologies efficiency. Between 2001 and 2003, the U.S. added nearly 900 gas-fired power generators to the grid, according to federal data.
“This is the only time in the history of power stations in the United States that there has been nearly as much installation of any capacity. It was the highest investment figure ever,” said Carey King, assistant director and research scientist at the University of Texas Energy Institute.
Since then, the addition of gas generators has remained relatively steady, and investors have added new generation units in some years and retired old units in others.
According to experts, these trends do not show a causal link between wind subsidies and declining investments in natural gas, or, according to Crenshaw, that wind subsidies emit traditional resources.
“There is no investment taking out,” King said. “The statement is not correct in the sense that there is not an amount of investment that everyone knows is going to happen and then suddenly does not happen. It is not a known number.”
Johnson, the energy economist, says it is common for renewable and natural gas generators to be built together – both of which play a complementary role in the reliability of a network. While wind turbines generate electricity according to varying wind patterns, gas facilities can be shot up and down during windless periods.
“Where you see renewable energy being built up, you are seeing that natural gas generation is growing because natural gas is the best backstop against renewable energy,” she said. “You can turn on a gas plant fairly quickly, you can push it up quickly. It’s much more reactive and flexible compared to coal or anything else.”
Crenshaw’s office did not respond to a request for comment.
Our verdict
Federal subsidies have been a boon for wind energy producers for the past few years. In a tweet of February 16, Crenshaw said these subsidies drive investments in traditional energy sources such as natural gas and nuclear, and that this transition led to the energy crisis Texas experienced during the winter storm in February.
In terms of nuclear energy, a U.S. Department of Energy cites the low cost of natural gas as the primary challenge for the nuclear industry, which remained relatively stable even before wind subsidies became popular.
In terms of natural gas, the number of gas-powered units has also remained relatively stable since a massive build-up in the early 2000s. But experts say it is difficult to identify wind subsidies as the main driver of investment in natural gas generation.
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