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DOE Grid Reliability vs Market Distortions

General discussions of the systemic, societal and civilisational effects of depletion.

Re: DOE Grid Reliability vs Market Distortions

Unread postby ROCKMAN » Fri 19 May 2017, 17:39:01

Newfie - "I would be happier at $100/bbl oil." The problem with that is the instability it brings to the entire system. Both good and bad (long term) for the oil patch. The better approach IMHO would have been years ago to start slowly increasing motor fuel taxes. That would have eventually encouraged conservation but could have been suspended when outside forces increased the price and hurt our economy.

I've said it for years: the oil patch would have fair much better without the lows AND THE HIGHS of oil prices. The volatility is as difficult to deal with as it is for the consumers.
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Re: DOE Grid Reliability vs Market Distortions

Unread postby Newfie » Fri 19 May 2017, 21:11:53

I'm OK with that Roc. Need something to apply the breaks.
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Re: DOE Grid Reliability vs Market Distortions

Unread postby sparky » Sun 21 May 2017, 19:31:13

.
@ Rockman ,
sure , taxes on petrol are a good conservation idea and a powerful financial stream of money for deficit running governments

but don't hang your hat on taxes slowing down when price of crude rise , in extravagantly taxed Europe ,
when there was a rise , the government would blame the Sheiks ,
when there was a drop , the government would creep up the taxes
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Re: DOE Grid Reliability vs Market Distortions

Unread postby ROCKMAN » Sun 21 May 2017, 23:24:35

sparky - One nice aspect of a high motor fuel tax is the ability to suspend much/all of it when oil prices spike. It won't hurt the conservation effort if the net price doesn't. And it provided something of a buffer to lessen the impact on the economy. And the best thing: with less impact on the economy it gives the feds less incentive to lower interest rates which, in addition to hurting savings interest rates it make easier for companies to borrow more money to drill more wells which would produce more oil which would eventually lower the price of oil which would encourage higher consumption.

And that puts us right back in the f*cking mess we're in today. LOL.
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Re: DOE Grid Reliability vs Market Distortions

Unread postby kublikhan » Thu 05 Mar 2020, 19:17:37

kublikhan wrote:
Tanada wrote:Apr 30, 2017 - The problem is the politicians over the last two decades picked winners in the form of massive subsidies for wind and solar that have massively distorted the markets already. I don't think subsidizing Coal is the answer, how about we strip out all those incentives for Solar and Wind and see what the market actually says?
That is already underway. The PTC(wind subsidy) has already started being phased out. It will be gone completely by 2020. ITC(solar subsidy) phase out will begin in 2020 and the phase out will end in 2024. Except instead of ending completely the ITC will revert to a 10% subsidy in 2024. So at least that problem is being addressed.
And the game of extending renewable subsidies when they expire continues. The federal wind subsidy(PTC) was scheduled to expire at the end of last year. However an extension was passed at the end of last year that not only renewed the subsidy for another year but actually increased it. Can't say I am too happy with the extension. Wind subsidies have been producing distortions in the electricity market where wind supply does not respond properly to price signals from utilities because of the subsidies. And this has resulting in Trump also passing a coal subsidy so they can compete with the wind subsidy. I say let the wind subsidy expire and scrap the new coal subsidy and let them both stand on their own merits.

The production tax credit for renewable wind projects under Section 45 of the Internal Revenue Code of 1986 (the "PTC" and "Code") has been extended by one year pursuant to a 2019 year-end federal government budget appropriations bill (the "Extenders Bill"). The Extenders Bill was passed by the US. House of Representatives on Tuesday, December 17, 2019, approved by the Senate on Thursday, December 19, 2019, and then signed into law by President Trump on December 20, 2019 (as part of the broader spending bill), preventing a would-be federal government shutdown.

Consistent with the theme that the PTC (as well as other similar renewable energy tax credits) was designed to be a temporary benefit aimed to help jumpstart a crucial, albeit nascent, renewables industry, the PTC has been scheduled to phase-down over time and ultimately expire. Prior to the Extenders Bill, this scheduled phase-down has involved reducing the PTC rate by 20% each year for wind facilities the construction of which begins after December 31, 2016, with the PTC completely expiring with respect to wind facilities the construction for which had not begun before January 1, 2020.

The Extenders Bill extended such phase-down by an additional year, allowing wind facilities the construction of which begins in 2020 to be eligible for 60% PTC. Following the Extenders Bill, the current updated PTC eligibility is as shown below:

100% PTC if construction of the project began during 2016 (or earlier)
80% PTC if construction of the project began during 2017
60% PTC if construction of the project began during 2018
40% PTC if construction of the project began during 2019
60% PTC if construction of the project begins during 2020
No PTC for projects the construction of which begins on or after January 1, 2021

ITC
The investment tax credit under Section 48 of the Code (the "ITC"), most commonly associated with solar projects, allows taxpayers to claim a credit as a percentage of the cost associated with investment in certain qualified energy property. In the case of solar projects, a 30% ITC is available in cases where construction begins prior to December 31, 2019, with this amount phasing down to 26% and 22% for construction beginning in 2020 and 2021, respectively. Further, the ITC phases down to only 10% in cases where construction begins before 2022 but is not placed in service before 2024. Commercial and utility scale projects, the construction of which begins in (or after) 2022 could be eligible for a 10% ITC.

Unfortunately for the solar industry, the PTC and other benefits under the Extenders Bill apparently came at the expense of a much-desired corresponding extension to the ITC for solar facilities, which was not included. In addition, tax credits for standalone energy storage batteries and offshore wind facilities were also ultimately left out of the Extenders Bill, in spite of broad industry support.

Conclusion
On the whole, although the Extenders Bill provides a small victory for onshore wind developers and investors, it represents a loss for the solar and offshore wind industries. Many industry commentators and tax advisors had been expecting that it would have been the ITC for standalone battery storage, solar projects and possibly offshore wind credits, rather than the PTC, that would be extended. That being said, as the ITC for solar energy projects would only start phasing-down next year, we expect the solar industry to continue pushing for such extensions in the years to come.
Extenders Bill – a small victory for Wind and a loss for Solar
The oil barrel is half-full.
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Re: DOE Grid Reliability vs Market Distortions

Unread postby Newfie » Fri 06 Mar 2020, 07:20:09

Kub,

Good idea. I’m not a big fan of wind for a variety of reasons.

What I support strongly is conservation of energy, using less when ever possible.
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