From the Editor's Desk

A wind advocate says subsidies hurt the wind industry

Most readers probably have never heard of Tang Energy Group. It is a clean energy company (developing wind turbine blades, wind farms, and clean coal technology) based in China but with a U.S. office in Dallas.

Perhaps what’s most noteworthy about Tang is a recent opinion piece running in the Wall Street Journal penned by the CEO of its American operation, Patrick Jenevein. Unlike virtually every other firm in the wind industry, Tang is arguing for a reduction in government subsidies for wind energy. Jenevein writes, “Government subsidies to new wind farms have only made the industry less focused on reducing costs. In turn, the industry produces a product that isn’t as efficient or cheap as it might be if we focused less on working the political system and more on research and development.”

Wow. A breath of fresh air has finally come to the wind industry.

I’ve argued before that wind turbine makers should get behind the idea of ending the production tax credit (PTC) that has driven a lot of U.S. investment in wind energy. Predicting doom over government subsidies makes them sound a lot like automakers in the 1980s who predicted an end to the industry because of government CAFE standards.

Jenevein says the PTC has had the pernicious effect of providing an incentive to build wind farms in areas that are less windy. “The average wind power project built in 2011 was located in an area with wind conditions 16% worse than those of the average project in 1998-99,” he points out.

“Without subsidies, the wind industry would be forced to take a hard fresh look at its product. Fewer wind farms would be built, eliminating the market-distorting glut,” Jenevein concludes.

I hope the rest of the wind industry takes this message to heart.

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