Green Energy Programs in Michigan Rely Heavily on Federal Subsidies—Some U.S. Senators Want To End the Flow of Money

by Rob Smith

Federal funding for rail. Federal funding for roads. Federal funding for green energy. Between 2009 and 2011, the state of Michigan has been the recipient of over $17 billion dollars in federal stimulus money also known as “recovery” money. In Wayne County, local K-12 school and governments received over $2.4 billion dollars in stimulus money over the same time frame. In Washtenaw County, A2Politico reported that the majority of the $767 million in stimulus money given over to went to the Regents of the University of Michigan.

Governor Rick Snyder’s plan for Michigan revolves around reinvention, or so he says. Much of the reinvention—transportation and energy production in particular—is being subsidized/funded by the federal government. There are persistent rumors that Secretary of Transportation Ray LaHood has promised Michigan officials $250 million for trains, with the understanding that the means to accept the money must be in place by year end. LaHood has made it clear that he will step down at the end of President Obama’s term. Michigan has been given almost $100 million in federal stimulus funds to be spent on transit. Likewise, green energy production programs in Michigan are being underwritten with federal stimulus money.

Tom Gantert once wrote for the local Ann Arbor newspaper and now does investigative reporting for the right-leaning Mackinac Center. While readers can discount the think tank as a propaganda machine for the conservative groups that fund it, Gantert’s reporting is thought-provoking. For instance in July of 2011 he posted “Stimulus Giveaways and Higher Electric Bills Pay for ‘Green Energy’ in Michigan.” Gantert reveals:

As Consumers Energy announced that its newest wind farm had cleared its first hurdle, it also touted the $29 million in property tax revenue that it is expected to provide to Mason County over the first 20 years of operation. The Mason County Planning Commission approved a special land use permit application for the $232 million Lake Winds Energy Park project last week.

What was left out of the press release was that the project is expected to receive $72 million in federal tax credits from the federal stimulus program, the American Recovery and Reinvestment Act. Consumers Energy spokesman Dennis Marvin said the $72 million in federal tax credits is expected to come over a 10-year period.

Critics of wind energy projects say government subsidies such as the $72 million that Lake Winds will receive are necessary because the power source itself is too expensive.

“Lake Winds and other mandated ‘renewable’ power will simply make energy more expensive for everyone,” said Pat Michaels, a senior fellow in environmental studies at the Cato Institute, in an email. “Wind and solar are particularly poor producers of energy, consuming large tracts of land and producing very little dependable power. If sufficient backup generation is not available to account for the facts that the wind does not always blow and the sun does not always shine, then new backup power must be constructed.”

“This is an expensive loser for the people of Michigan, and mandating 10 percent of power from such sources will only create further losses,” Michaels wrote.

Now green energy subsidies—including the $72 million given by the federal government to the Consumers Energy wind farm—are coming under fire from U.S. Senators such as Lamar Alexander. On March 8th The Tennessean reported that Republican Senator Alexander “is pushing his colleagues in Congress to blow away wind-energy subsidies this year.”

In a speech delivered to listeners at the Heritage Foundation Alexander said he wants Congress to “end the big-wind gravy train.” He proposes an end to the production tax credit for electricity generated by wind and other renewable sources. Alexander is working on legislation that would reroute the money from energy subsidies to pay down the national debt and fund clean-energy research and development.

It’s an attractive idea to several of Alexander’s colleagues. An end to the subsidies could, on the other hand, put a serious crimp in Michigan’s reinvention as a green energy producing state.

The production tax credit gives renewable-energy producers — mostly wind companies — an income-tax break of 2.2 cents per kilowatt-hour of electricity they generate for the first 10 years of production.

Tennessean reporter Elizabeth Bewley writes:

The renewable-energy industry and advocacy groups are lobbying Congress to renew the credit this year. They say it’s helped create jobs, clean the air and lower the cost of wind power by 90 percent.

Nathanael Greene, director of renewable-energy policy at the Natural Resources Defense Council, said that while individual wind turbines don’t operate all the time, they function well as part of a larger electrical grid. And they generate electricity that’s comparable in price to coal, he added.

“It’s really more about how much does it cost us and how well is our grid connected,” he said. “Any individual turbine only operates 35 percent of the time, but all the turbines across the country are operating much more often.”

Greene disagreed with Alexander’s argument that the nation can’t afford the subsidy.

“We just can’t afford not to be a leader on clean energy,” he said. “We need those jobs and we need the clean air that comes from it.”

Wind-power advocates say the country could get up to 20 percent of its power from wind without facing any reliability problems. In 2010, 2.3 percent of the country’s electricity came from wind, according to the American Wind Energy Association.