T. Boone Pickens, Texas oil billionaire and wind energy advocate is pushing Congress to renew the soon to expire Production Tax Credit (PTC) for another ten years. Pickens has been touring the country to promote his Midwest wind farms to replace 22% of natural gas produced electricity. To date, Congress has been reluctant to renew the credit for lack of a way to pay the estimated $15B a year, outside of borrowing more money from China.
Pickens has leased hundreds of thousands of acres in Texas to erect 2700 wind turbines. Massive grid expansion to support the plan is raising the concern of landowners threatened by eminent domain seizures. The oilman wants Congress to speed up construction of massive energy corridors and further cede control of transmission lines built by him away from the Federal Energy Regulatory Commission (FERC).
As an advocate of both renewable energy and a proponent for decentralized energy I am watching how this all plays out very closely. The PTC is a major investment component for the development of utility scale wind projects yet the Pickens Plan enhances the monopolization of energy production. Whereas distributing the wealth, not concentrating it in the hands of a few, stabilizes regional economies.
The US sends $700B annually to oil rich countries improving their wealth and diminishing ours. Centralized or decentralized, $15B in tax credits to keep dollars local may reap huge economic benefits to the nation as a whole. European countries, Germany for example, employed similar inducements toward renewable energy. Feed-in tariffs, incentives requiring utilities to pay premium prices for renewable energy helped finance non-polluting energy producers. Germany adds 3000MW of new renewable energy each year.
Clearly, some form of government action is required to motivate investment in renewable technology. The action can take the form of fines as well as incentives. Renewable Portfolio Standards are legal obligations that, if not met, impose penalties for non-compliance. Mandates such as 25% of all energy must come from renewable sources by 2025 can become very costly to both the producer and the consumer with the trading of carbon offsets now a new commodity.
Still, in the end, decentralizing is by far the best way to spread the wealth. Distributed energy production does not require any new real estate because it produces power at the point of consumption and takes advantage of existing rooftops and industrial sites. Just as importantly, as I have written before, public ownership of essential services including electricity production has been proven to be more efficient and to provide more benefits to the taxpayer than any centralized model.