Apr 12, 2019
Tax Credits for Wind and Solar Work. Why are Texas Lawmakers Going After Them?
By: Joshua D. Rhodes

The electricity grid that services most of Texas, which is managed by the Electric Reliability Council of Texas (ERCOT), got almost 19% of its electricity from wind last year. That is an amazing fact in a state that is legendary for oil and gas. But despite wind energy’s dramatic expansion to become the No. 3 (soon to be No. 2) supplier of Texas electricity, not everyone is a fan. In fact, two pieces of legislation under consideration by Texas lawmakers, House Bill 2908 and Senate Bill 2232, would take some of the wind out of wind power’s sail.

Renewable forms of energy such as wind and solar are often criticized for the federal subsidies they receive. One reason is that the subsidies are easy to see, making them an easy target for critics.

Both bills would authorize a study to assess the impact of the tax credits on the Texas electricity market and make recommendations on how to use state policy to counteract the federal policy. Although some market tweaks could help improve resiliency, establishing a precedent to tax the industry with the second fastest job growth rate in the country is not the answer.

The Renewable Electricity Production Tax Credit (PTC), which is most often taken by wind farms, credits every mega-watt hour that wind produces $23 for the first 10 years of production. For solar, the Business Energy Investment Tax Credit (ITC) provides a 30% tax credit (applied to upfront installation costs) for the project. Both federal tax credits, the PTC and ITC, for renewable projects are being phased out over the next few years.

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