Wind Industry Attacks California Solar Subsidies

Published July 15, 2014

The California Wind Energy Association and other renewable energy groups criticized a new law extending special tax breaks to the California solar power industry. Wind power, biomass, and geothermal power groups say the special benefits for solar power tilt the playing field against other renewable power options.

Senate Bill 871, signed by Gov. Jerry Brown on June 20, extends until 2025 an exemption for solar power systems from state property taxes. The existing exemption was not scheduled to expire until 2017, but the legislature rushed the new exemption into law at the end of the session with almost no advance notice or opportunity for debate.

Renewable Groups Criticize Solar Deal
“There is no reason for the State Legislature and Governor Brown to extend a property tax exemption to large scale solar energy projects at this time,” said Nancy Rader, executive director of the California Wind Energy Association, in a press statement.

“What is disturbing is this tax break for the solar industry comes at a time when existing biomass projects are shutting down,” Julee Malinowski-Ball, executive director for the California Biomass Energy Alliance, said in the same press statement. “Wind and geothermal renewable energy producers are also facing challenges in getting utilities to recontract for their existing resources. California needs these resources to balance our energy portfolio and meet long-term greenhouse gas reduction goals.”

“The original intent of the property tax exemption was to help stimulate what was once a fledgling industry. Today, solar PV is thriving and utility-scale solar is expected to increase more than 1,200 percent between 2012 and 2020, according to California Public Utilities Commission (CPUC) projections,” the three renewable energy groups noted in the press statement.

Unnecessary Rush to Subsidize
Section 73 of the California Revenue and Taxation Code allows a property tax exemption for certain types of solar energy systems installed between January 1, 1999 and December 31, 2016. AB 1451 amended this section was amended in 2008 to include the construction of an active solar energy system installed by the owner-builder in the initial construction of a new building the owner-builder does not intend to occupy.

Established in 2002, and accelerated by the enactment of two additional laws in 2006 and 2011, California’s Renewable Portfolio Standard (RPS) requires investor-owned utilities, electric service providers, and community-choice aggregators to increase procurement from eligible renewable energy sources to 33 percent of total procurement by 2020.

Non-Solar Renewables Struggling
“It is amazing how the renewable energy industry is struggling in California even with mind-boggling federal, state, and local subsidies,” said Jay Lehr, science director for the Heartland Institute, which publishes Environment & Climate News. “The CPUC projects geothermal and biomass power will decline by 50 percent in the state by 2020 despite enormous subsidies.”

Wind, too, is encountering turbulence in trying to secure contract renewals that would enable 1,500 megawatts of old wind turbines to be replaced by many fewer newer ones, according to the California political news site Fox & Hounds.

“The bickering among competing renewable power industries illustrates how they care little about the national and California environment and economy, but instead are merely looking to pad their pocketbooks at taxpayer expense,” Lehr observed.

Welcome to the Fold
Today’s squabbles among the already heavily subsidized renewable energy producers may be a sign of things to come. John Droz, a physicist and energy analyst, says it is “ludicrous” that subsidy-dependent renewable energy industries complain about the subsidies received by other renewable energy industries.

“If this isn’t a case of the pot calling the kettle black, I don’t know what is,” said Droz.

“Wind producers have no leg to stand on when it comes to subsidies,” agreed Daniel Simmons, director of regulatory and state affairs at the Institute for Energy Research.

“Wind and solar are both dependent on subsidies for the large increase in installations we have seen over the past few years,” Simmons explained. “But if this means wind producers no longer want subsidies for any energy sources, then we welcome them into the fold.”

Look in the Mirror
“The wind power industry is taking hypocrisy to new levels in their protests against solar power,” Lehr observed. “Wind power needs to look in the mirror. Big Wind claims solar power subsidies were designed long ago merely to help a fledgling industry get on its feet. That, however, is the exact same model the wind power industry has been advocating for its own taxpayer subsidies. Now, decades later, the wind power industry continues to push for never-ending subsidies to prop up an industry that will fall like a house of cards without never-ending subsidies and guaranteed market share.”

Bonner R. Cohen, Ph. D., ([email protected]) is a senior fellow at the National Center for Public Policy Research.