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Summary:

An op-ed piece in the Wall Street Journal is calling Republicans to get rid of “green pork” — a grant program that covers nearly a third of the cost of installing renewable energy generation projects.

Lipstick won't help.

When Republicans emerged as the winners in last month’s election, the renewable energy industry wondered whether the shift in political power would lead to policies unfavorable to their businesses’ growth. Well, here’s one clue that the industry might have to fight a bit harder to get government support: The Wall Street Journal ran an op-ed piece Monday that branded a clean power grant program that received a 1-year extension last week as “green pork.”

The Op-ed states that the grant program is inefficient and therefore a costly way to boost the country’s electricity production and job market. In addition, the article said the program should be trimmed out via Republican budget deliberations.

The editorial targeted mainly the wind industry, which it noted had added fewer megawatts of generation capacity for the first nine months of this year than it did in corresponding periods in 2008 and 2009.

Talk about throwing good money after bad. Despite more than $30 billion in subsidies for ‘clean energy’ in the 2009 stimulus bill, Big Wind still can’t make it in the marketplace … Wind accounts for a little more than 1% of electricity generation and coal almost 50%. So it takes at least 25 times more workers to produce a kilowatt of electricity from wind as from coal.

The editorial also concluded that solar energy also isn’t a good public investment:

Given this level of inefficiency, it’s no wonder that wind and solar energy require at least 20 times more in government subsidies per unit of electricity generated than the average for coal and natural gas, according to a 2007 study by the Energy Information Administration.

It’s no secret that renewable electricity costs more to produce, but its costs alone aren’t the only measure of its worth. The U.S. is one of the world’s top emitters of greenhouse gas emissions, and the country is under pressure to do much more to reduce them. Installing renewable energy is a big step toward achieving that goal. Cleaner energy also means cleaner air quality, which provides tremendous public health benefits.

Wind and solar industry trade groups worked together on lobbying for the extension of the grant program, which covers 30 percent of the costs of renewable energy projects (not just solar and wind, but also other forms of renewable electricity). Wind projects have received some of the largest awards from the grant program.

The American Recovery and Reinvestment funded the program, which was originally set to end by Dec. 31 this year. Wind and solar companies said the program was expiring too soon because the economy hadn’t recovered as quickly as expected.

The grant program is an alternative to getting a 30 percent investment tax credit, which renewable energy developers can attract project financing from banks and other investors. Investors put up the money and get the tax credit as part of the deal, but the tax credit is attractive only if they make enough net income and therefore generate enough taxes.

Renewable energy developers have reported more banks are willing to make loans today than they did a year ago. U.S. Bancorp., for one, said it would spend more than $114 million dollars to finance solar installations through companies such as SolarCity, Sungevity and SunRun this year (the SunRun announcement didn’t say how much). Tim Derrick, CEO of Axio Power, said at a solar conference earlier this month that he was seeing more banks willing to invest in projects, particularly those in the 5-megawatt to 10-megawatt range.

But given the overall economy is still struggling, renewable energy advocates warned that the end of a grant program would have led to serious job losses.

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Photo courtesy of The Pug Father

  1. Anyone expect Republicans, the WSJ or ol’ Rupert to endorse anything other than old-fashioned dirty pork?

    Business as usual in Congress and the Wall Street money barrio smells as bad as it ever did – and will remain so until a political roto-rooter more thorough than anything offered by the hacks Obama relied upon is voted into office.

    Not in my lifetime.

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  2. As usual, the WSJ leaves out the comparative context. When it comes to energy subsidies and federal largess, wind and solar are small potatoes compared to the $53.9 billion in tax breaks and the $16.3 billion in direct subsidies enjoyed by the fossil fuels sector. Corn ethanol gets a larger share of the federal dole than renewables as well at $16.8 billion. Those are annual figures compiled by the Environmental Law Institute. You can see the data in graphic form:

    http://awesome.good.is/transparency/web/1012/subsidize-this/flat.html

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  3. Just to set the article writer right: The grant program is not providing new money – it simply cuts out the banks.

    There is an established 30% tax credit, still valid for a few years. The problem was that solar/wind companies had to find a tax payer who would buy their tax credit. Thanks to the grant program they can get the money back from the treasury. That saves 5-10% of the tax credit going as fees to the bankers. Good thing.

    Nice article here, concerning the WSJ:
    http://www.greentechmedia.com/articles/read/why-conservatives-are-bad-on-energy-its-all-about-the-costs/

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    1. Chris, I don’t know what you mean by the grant program isn’t providing “new money.” Money is money, new or old.

      The 30% investment tax credit is valid until 2016.

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