US Tax Credits & Subsidies in Wind Power Industries

By Ian Teñido

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The United States is increasingly channeling its effort towards utilization of energy that does not deplete nor destroy the natural environment, also referred to as alternative energy (Rivkin & Silk, 2013). Wind energy is a renewable form of energy so it cannot be expected to run out since it only depends on the rotation of the earth and the wind intensity to generate the energy which is harnessed and distributed as power (Lewis, 2009). Being the main form of alternative energy apart from solar energy, wind energy leads us to the all-important question as to whether or not the government should offer tax credits and subsidies to the wind power industry or not.

Wind power is a conventional source of power in the United States as it supplied 4.5 percent of the electricity used in 2013. The wind power industry has increased its manufacturing capacity driving down the cost of wind power. Between 2008 and 2013, new investments in wind power were estimated to average at $13 billion per year (US Department of Energy, 2016). Increased government support in form of production tax credits and subsidies may increase wind deployment geographically due to advancement of technology where larger turbines with advanced control mechanisms will facilitate expansion in construction, manufacturing, and maintenance. The new investments will subsequently spur an increase in economic activity since demand for goods and services as well as revenue in form of property tax or land lease payments will increase in surrounding project areas (Lewis, 2009).

The answer to the question of whether or not to subsidize wind power also depends on its safety, efficiency and effectiveness. In relation to safety, wind energy can be considered fairly safe as compared to the other forms of energy such as fossil fueled power plants. Engineered Safety Features (ESFs) are designed for wind turbines to provide the requisite platform for identification of probable failure modes which thus prompt the operators to take the necessary measures to prevent any catastrophe (Lewis, 2009). However, mechanical hazards resulting from rotation of the turbine blades which can pick speeds of up to 180 miles per hour can in some cases lead to ejection of the blades that could cause bodily injury upon contact with nearby individuals. As a result, it is usually advisable that the turbines be placed in open areas preferably far from human settlement.

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Despite the high initial investment cost, wind power is as efficient as it is effective since the wind turbines are approximated to last for up to 20 years translating to relatively lower costs of replacement.  They should however be subjected to regular inspections so as to ensure that they are in the best working order. Wind power is among the least-priced energy technologies seeing as a kilowatt-hour can go for as little as six cents (Rivkin & Silk, 2013). This of course depends on the wind resources as well as that particular wind power project’s funding. Moreover, the industry also boasts of creating employment to 73,000 individuals roughly with the potential to employ an additional 600,000 in manufacturing and servicing of the wind energy generators by the year 2050 according to the Wind Vision Report.

The government should therefore subsidize wind power industries in a bid to increase the sources of power while decreasing the costs associated. An increase in the generation of wind power has the benefits of reducing emission of carbon dioxide thus improving the quality of air and reducing the strain on natural resources. Wind generation should be optimized and the concerned parties should work together to implement various approaches aimed at reducing wind energy costs, expanding areas that can be developed into wind generation centers and eventually, contributing to general economic growth. Tax credits and subsidies will encourage the above mentioned factors through reduced operating expenses optimizing the annual energy production ultimately making wind power a preferable source of renewable energy.

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Reference

Lewis, D. (2009). Putting the Wind up [Wind Power]. Engineering & Technology, 4(3), 52-55. http://dx.doi.org/10.1049/et.2009.0312

Rivkin, D. & Silk, L. (2013). Wind Energy. Burlington, MA: Jones & Bartlett Learning.

US Department of Energy (2016). Wind Vision: A New Era for Wind Power in the United States. Retrieved from http://energy.gov/eere/wind/maps/wind-vision on June 28th, 2016.

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