Even as Wind Power Rises, It Falls Under a Political Cloud RSS Feed

Even as Wind Power Rises, It Falls Under a Political Cloud

Wind farms, with their rapid geographic spread and technological advances, are reshaping the electric system, defying skepticism that they are steady or reliable enough to displace conventional power plants.

“The fuel of choice right now, certainly for us, is wind,” said Ben Fowke, the chief executive of Xcel Energy, which shut down a large natural-gas plant in Colorado for two days in January and let wind fill, on average, half of its customer demand.

Now politics, not skepticism, may be wind power’s biggest barrier. Under new leadership with ties to conventional energy interests, the Energy Department is scrambling to complete an internal study in the next month that could lead to an upending of the policies that fostered the rapid spread of solar and wind.

In ordering the study, Energy Secretary Rick Perry directed his department to determine whether federal subsidies that encourage wind and solar energy — and the way wholesale markets value different energy sources — are putting conventional power plants at a disadvantage and threatening the stability of the grid.

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The study has been praised by trade groups representing the nuclear and coal industries. But it is being conducted without including many of those potentially affected. And clean-energy executives and advocates, as well as some lawmakers, have expressed concern that it will be grounded more in ideology than in evidence.

A group of trade organizations representing clean-energy interests delivered analyses to the department in mid-May arguing that renewables do not threaten grid reliability and that subsidies are not to blame for the economic troubles of coal and nuclear plants.

Representative Paul D. Tonko, a Democrat from upstate New York who serves on the House Energy and Commerce Committee, raised concerns at a recent meeting of utility industry executives that the new study would not be objective. “It appears to me to be a bottom line that’s written and now looking for a study to substantiate it,” he said in an interview. “I think it’s an attempt to hold on to the past.”

Among the subsidies the department is examining is a production tax credit that allows most wind farms to shave pennies off the price of each kilowatt-hour they send to the grid. Though flattening demand for electricity and cheap natural gas are the main forces depressing wholesale energy prices, the credit means that wind producers can often offer their power to the market at the lowest price. Sometimes, when energy demand is low and wind is strong, the credit can drive the effective price below zero.

Mr. Perry has raised the possibility of federal intervention in energy markets to protect coal and nuclear plants against lower-priced wind and natural-gas supplies. While he backed state control of market policies as Texas governor, he said at a conference in April that “the boot’s on the other foot now.”

Energy experts say that without the credit and other favorable subsidies, mandates and market policies in place, wind development and production will be threatened. When the credit has periodically expired, installations nearly ground to a halt — dropping by roughly 76 to 93 percent, according to an analysis by the Union of Concerned Scientists — only to resume again with its renewal. Congressional estimates put the cost of the credit at $3.1 billion last year, and the figure is expected to reach $4 billion this year.

“There’s no question: if the P.T.C. goes away, that’s a big number,” said Robert F. Shapiro, a lawyer at Chadbourne & Parke in Washington, who focuses on project finance and energy. “New plants would have to meet a tougher test, a market-price test, that can’t be masked in part by that subsidy.”

The department would not comment on how Mr. McCormack and Mr. Fisher would influence the study.

Parts of the study aim to determine the extent to which current regulations and incentives are forcing coal and nuclear plants to close, and whether the increased use of renewable sources is adding to the cost of operating the system.

Read full article at NY Times