Nearly 20 years after Congress approved the first tax breaks for wind power, renewable-energy producers are still reaping the windfall. But the billions in subsidies that wind producers continue to receive is making them richer at the expense of taxpayers and electricity consumers.

And it undermines the viability of the electric power system, pushing scores of base-load natural gas, coal and nuclear plants into premature retirement and putting the reliability of the system at risk.

The Energy Policy Act of 1992 created what’s known as the production tax credit, which gives 2.1 cents for every kilowatt-hour of wind electricity produced by a wind turbine during the first ten years of operation. After years of subsidization, the cost of the Production Tax Credit is expected to reach more than $65 billion before its scheduled phase out around 2029.

When Congress approved the tax credit, it was intended to support development of what at the time was an emerging technology. But wind power is now a mature technology that even its advocates acknowledge can compete on its own against traditional power sources without government assistance.

Due to advances in wind technology, the cost of wind power has fallen dramatically since 2010. Today wind supplies more than 20% of the electricity in Texas and nearly as much in Kansas, Oklahoma and some other states. According to the financial firm Lazard, wind power’s levelized cost at the lower end in 2019 was $28 per megawatt hour. By contrast, the cost of combined-cycle natural gas was $44 per megawatt hour, coal $66 and nuclear power $118.

Over all, for more than a decade, the power industry has been struggling with how to prevent the loss of base-load plants that are needed to maintain diversity in the electric supply system. Wind and solar power account for less than 10% of the nation’s generating capacity but accounted for more than 50% of the capacity added last year.

Like wind, the cost of utility-scale solar power has continued to fall. The cost to manufacture a solar module is less than one-tenth of what it was a decade ago. But a generous subsidy known as the Investment Tax Credit has also provided an engine for solar’s growth. And this, combined with the wind subsidy, causes too many power plants to retire before it is economic for them to do so. And the situation has been made worse in many states that mandate the use of renewable energy.

Nonetheless, the U.S. economy will require a mix of energy sources to meet base-load generation needs for the foreseeable future. The alternative is reduced reserve margins and the growing risk of brownouts and blackouts.

The way to avoid this fate is to discontinue tax credits for wind and solar power. Renewbles will have to earn their own way in the world, by competing without subsidies.

Howard Shaffer

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