Wind subsidies aren't 'pushing out' nuclear, natural gas investments

U.S. Rep. Dan Crenshaw, R-Houston, was one of several Texas Republicans casting blame for the state's blackouts this month as millions of Texans huddled in their frigid homes.

As with many other Republicans and conservative pundits, Crenshaw pointed his finger at wind energy as the primary culprit. But in a Feb. 16 tweet thread, Crenshaw expanded criticism beyond frozen wind turbines to include the federal subsidies for the wind industry and "force the grid to rely in part on wind as a power source."

"Why don’t we have extra gas power when we need it most?" Crenshaw tweeted. "Because years of federal subsidies for wind has caused an over reliance on wind and an under-investment in new gas and nuclear plants." 

"Subsidizing investment in wind has pushed gas and nuclear out," he said. 

There’s no doubt that wind energy now plays a major role in supplying Texas and the U.S. with power. In Texas, wind has grown from supplying 11% of the state’s energy demand to 23% over the last five years. It is now the state’s second-largest energy resource after natural gas.   

In the U.S., wind accounted for 7% of all energy generation and was the nation's fourth-largest energy resource in 2019 after natural gas, coal and nuclear, according to the latest data available from the U.S. Energy Information Administration.

It’s accurate to say that renewable energy subsidies over the last two decades have stoked investments in wind energy, said Bernadette Johnson, an energy economist with Enverus.  

"Those underpin every major renewable investment in the country," Johnson said. 

But is it true that gas and nuclear energy sources across the U.S. have been "pushed" out, and that federal wind subsidies are to blame? 

For nearly 200 years, federal subsidies have supported energy generation and infrastructure for all resources, according to a 2018 report from the University of Texas Energy Institute. For instance, in the 1800s the federal government leased timber stands and coal deposits to energy companies at generously low rates. In the 20th century, various tax policies sought to promote domestic oil and gas production. And in the 1950s, former President Dwight D. Eisenhower’s Atoms for Peace program funneled billions of dollars into nuclear energy development. 

Before the turn of the century, fossil fuel industries accounted for up to 70% of the total cost of energy tax breaks. It wasn’t until around 2008 that renewable energy sources became the primary benefactor of federal support.

"Where once the government targeted energy production generally, it has shifted its spending focus towards cleaner, lower-carbon sources," Energy Institute researchers wrote.

Generally, subsidies are defined as direct payments from the government to energy producers and measures like tax abatements. 

The most popular subsidy program from which wind energy producers benefit is the production tax credit, which was initially introduced in the Energy Policy Act of 1992. Production tax credits reduce a wind producer’s tax burden by a certain amount for every megawatt-hour of energy produced. In 2016, compensation was set at $23 per megawatt hour, although that amount ratchets down over a 10-year period.  

Wind energy producers also benefited from another federal program that reimbursed developers 30% of their capital costs in lieu of a tax credit. Known as Section 1603 cash grants, the program was introduced in 2009 and distributed $25.7 billion to green energy projects before it expired three years later.

Between 2010 and 2013, Energy Institute researchers found that federal wind energy subsidies jumped from $5.4 billion to $5.7 billion annually thanks to the Section 1603 grants. Following the program's expiration, however, federal wind subsidies dropped to $2.7 billion in 2016 then were projected to climb back up to $4.6 billion by 2019. 

Meanwhile, hydrocarbon-based energy producers, mostly including natural gas, also have enjoyed their share of federal subsidies — from $3.1 billion in 2010 to a projected $6.2 billion in 2019, mostly through production tax abatements. Subsidies for nuclear sources over the last decade have remained relatively steady at around $1.3 billion annually.

The amount of energy produced by wind and natural gas sources across the country have both increased. Energy produced by wind turbines has tripled over the last decade, while the energy produced by natural gas-fired plants has increased by 60% over the same period, according to federal data. 

Nuclear energy, on the other hand, has remained relatively steady over the last 10 years at around 800,000 megawatts per year.  

Nuclear technology hasn’t attracted significant investment in years, since before wind power gained a foothold in the energy market. 

According to federal data, no new nuclear generation units have been added in the last two decades — hence nuclear energy’s relatively flat generation output since 2001. Eight nuclear generation units have been retired since 2013, federal data shows. 

But nuclear’s flattened investment curve isn’t primarily due to the growing prevalence of renewable technologies. Rather, a 2017 U.S. Department of Energy Staff Report issued under former Secretary Rick Perry lists cheap natural gas as the "biggest contributor" to nuclear and coal plant retirements. 

Featured Fact-check

Climate Power

stated on October 18, 2024 in Organization email

Says Eric Hovde “claims anyone who believes in transitioning to a clean energy economy is ‘smoking crack cocaine.’”

"Production costs of coal and nuclear plants remained somewhat flat, while the new and existing, more flexible, and relatively lower-operating cost natural gas plants drove down wholesale market prices to the point that some formerly profitable nuclear and coal facilities began operating at a loss," the 2017 report says. 

The "lower variable operating costs" of renewable resources is listed as one of three other factors adding pressure to the nuclear energy sector. Other challenges include low growth in electricity demand and regulatory costs.

The heyday for natural gas investments peaked in the early 2000s after energy markets in Texas and elsewhere deregulated and natural gas technologies made significant efficiency improvements. Between 2001 and 2003, the U.S. added nearly 900 gas-fired electric generation units to the grid, according to federal data.  

"That's the only time in the history of power plants in the U.S. that there was anywhere close to that much installation of any capacity. That was the highest rate of investment ever," said Carey King, assistant director and research scientist at the University of Texas Energy Institute.

Since then, gas-fired generator additions have remained relatively steady with investors adding new generation units in some years and retiring old units in others.  

According to experts, these trends don’t demonstrate a causal relationship between wind subsidies and diminishing investments in natural gas, or, in Crenshaw’s terms, that wind subsidies are pushing out traditional resources. 

"There is no pushing out investment," King said. "That statement is not correct in the sense that there is not a quantity of investment that everybody knows is going to happen and then suddenly doesn't happen. That's not a known number." 

Johnson, the energy economist, says that it’s common for renewable and natural gas generators to be built in tandem — both serving complimentary roles in a grid’s reliability. While wind turbines generate electricity according to intermittent wind patterns, gas-fired facilities can be fired up and ratcheted down during wind-less periods. 

"Generally where you see renewables being built out you see natural gas-fired generation growing because natural gas is the best backstop against renewables," she said. "You can turn on a gas plant pretty quickly, you can ramp it up quickly. It's much more reactive and flexible compared to coal or anything else." 

Crenshaw’s office did not respond to a request for comment. 

Federal subsidies have been a boon to wind energy producers over the last several years. In a Feb. 16 tweet threat, Crenshaw said that these subsidies are pushing out investments in traditional energy resources like natural gas and nuclear, and that this transition led to the energy crisis Texas experienced during the February winter storm.

With regard to nuclear energy, a U.S. Department of Energy report lists the low cost of natural gas as the primary challenge to the nuclear industry, which has remained relatively steady since before wind subsidies became popular. 

With regard to natural gas, the number of gas-fired units also has remained relatively steady since a massive build-up in the early 2000s. But experts say that it’s difficult to identify wind subsidies as the primary driver behind investments in natural gas generation. 

We rate this claim False.