Government aid to the wind power industry should be cut, helping to spark innovation and reduce prices, says Patrick Jenevein, CEO of Tang Energy Group, a wind power provider.
“Without subsidies, the wind industry would be forced to take a hard fresh look at its product,” he writes in The Wall Street Journal
“Fewer wind farms would be built, eliminating the market-distorting glut. And if there is truly a need for wind energy, entrepreneurs who improve the business's fundamentals will find a way to compete.”
So the automatic spending cuts known as the sequester are doing the industry a favor by cutting cash grants from the government by 8.7 percent, Jenevein says.
Wind power companies have two tax credits — one that applies to their investment in a new project, and one based on how much power they actually produce. The former has proven more popular, Jenevein says. But it distorts the market by creating incentives to build wind projects regardless of their merit.
“Government subsidies to new wind farms have only made the industry less focused on reducing costs,” he states. “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.”
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