Tag Archives: government

Supporting wind energy and saving U.S. taxpayers nearly $5 billion in three easy steps

December 18, 2012 |

 

CPI’s recent study, Supporting Renewables While Saving Taxpayers Money, showed that U.S. governments could save a lot of money by adjusting how tax incentives for renewable energy are delivered. In particular, we showed that a $21/MWh taxable cash incentive for production (TCP) for wind could provide the same support to wind projects as the current $22/MWh production tax credit (PTC) and almost halve the cost to federal and state governments.

US Government could save 4.5 billion by adjusting current wind policy

The PTC is set to expire at the end of this year. The Senate has proposed extending it by one year, but at a cost to government in excess of $12 billion – a heavy lift given budget constraints. Replacing the PTC with a TCP could reduce that cost to $7.5 billion. A similar reduction in cost would apply to any proposal to extend the PTC, including the recent proposal by the American Wind Energy Association to phase-out the PTC over six years.

How does this work?

Well, wind project developers have limited tax liabilities. That means that by themselves, most project developers can’t use federal tax benefits until years after they are received, eroding almost two thirds of the incentive value. In order to get more out of these incentives, project developers bring in outside investors who have greater tax liabilities. This is called tax-equity financing. However, tax equity financing is more expensive and complex than conventional finance, and erodes about a third of the incentive value.

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Taxpayers could save on wind and solar

October 4, 2012 |

 

When something really good is advertised at half price, my first thought is “this is too good to be true.” After doing the research, if I find the deal is really all it’s cracked up to be, I spread the word to as many people as I can, so they can save too.

That’s why, when my research team discovered how much taxpayers stand to save through small changes to federal wind and solar policies, we quadruple-checked our numbers, asked other experts if what we were seeing was correct, and then made a commitment to let as many people know as possible.

It’s no secret that wind and solar in the United States are booming. Renewable electricity generation more than doubled since 2005. While this growth was financed largely through private investment, state and federal policies played a key role in helping these new, important industries expand.

Policymakers support wind and solar because renewable energy brings many benefits for the American people. But key renewable incentives are expiring just as federal lawmakers are looking for opportunities to reduce the deficit. Policymakers understandably want to balance support for renewable energy with these fiscal pressures.

It turns out there are ways to do just that. Let me explain.

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