Federal Alternative Energy Subsidies’ Expiration Date Causes ‘Wind Rush’ in Texas

“There definitely is a future for the industry. Now, whether they’ll be able to survive without subsidies, that’s the question.”

By Kristen CabreraOctober 16, 2018 11:57 am| ,

The state of Texas is the biggest producer of wind power in the U.S. But at the end of 2019, federal subsidies for renewable wind energy will expire. This has led to a wind rush, of sorts. Kristian Hérnandez is a Texan and the 2017 American University Fellow at the Center for Public Integrity in Washington, D.C. He wrote about this in a recent article for Mother Jones.

Hérnandez says the main driver of the wind industry has been the Production Tax credit established in 1994 by the Bush administration. The tax credit has been extended several times throughout the Bush, Clinton and Obama eras, but industry officials say that is not likely to happen in the current Trump administration.

“That is what has set off this rush to build new wind farms,” Hérnandez says. “We’re talking about 2,200 of these 300- to 500-foot wind turbines that were built just last year in 2017 in Texas.”

Seventy percent of the $37 billion in subsidies that the wind industry gets comes from this one credit that is set to expire at the end of next year, Hérnandez says. Other states in the U.S. are looking into creating their own subsidies to incentivize the clean-energy industry. The state of Texas’ tax credit is about 55 cents per megawatt hour – small in comparison to the $24 per megawatt hour that is provided federally.

In the early 2000s, Hérnandez says Texas made a $7 billion investment in the wind industry by connecting wind farms in west Texas to the grid. But now, the capacity of those lines is close to capacity.

“There might need to be further investment from Texas if this wind rush continues,” he says.

The tax credit lasts for 10 years, Hérnandez says, so as long as wind companies can get in before the late-2019 deadline, they will see subsidies for the next decade. Because of the past investment in the industry, new technologies have made wind turbines more powerful and efficient in harvesting energy.

“There definitely is a future for the industry. Now, whether they’ll be able to survive without subsidies, that’s the question,” he says.

Written by Kristen Cabrera.