◊ Part of the ‘wind energy’ series of articles ◊
Looking into the hidden costs associated with wind energy we can start with government subsidies and tax incentives that artificially reduce prices or increase profit margins for Independent Power Producers.
In Ontario there are currently no subsidy programs per se for wind energy, however there are Smart Grid initiatives that may involve wind. There is a case to be made regarding programs such as the FIT, RESOP, LRP and GEIA where the Ontario government pays higher than market pricing to generators with ratepayers picking up the tab. This is a thinly veiled subsidy for the industry.
Carbon reduction incentive programs could have subsidized wind energy, however the Ontario government has opted out of those plans.
Subsidies outside Ontario
Renewable energy is subsidized globally to varying degrees. According to Forbes, in a 2018 article, the top six counties subsidizing wind spend more than $40 billion annually in doing so. Much of the funding is hidden in contract agreements, tax law and statutes.
In Alberta the government provides price guarantees for wind generators.
The United States has been subsidizing wind energy for decades under various programs. A current estimate of Production Tax Credits for wind is 2.3 cents/kWh.
A KPMG study published in 2014 sponsored by the European Commission, Directorate-General for Energy showed that the 28 member states provided approximately 10 Billion Euros of subsidies to the onshore wind energy industry in 2012. Most of the subsidies came in the form of production support. The trend of subsidies in the European Union is to reduce or eliminate them for renewable energy.
There is an argument against subsidies which asserts that investor-owned generators profit from subsidies by increasing their margins knowing that their pricing will be subsequently reduced by government incentives. The subsidies then go to investors and not energy consumers.
Things are not always as they appear.
Derek
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