The Inflation Reduction Act (IRA) includes hundreds of billions of dollars in subsidies for green energy, yet now renewable developers want utility rate-payers in New York and other states to bail them out.
According to a report late last month by the New York State Energy Research and Development Authority (Nyserda), large offshore wind developers are asking for an average 48% price adjustment in their contracts to cover rising costs. The Alliance for Clean Energy NY is also requesting an average 64% price increase on 86 solar and wind projects.
The IRA includes federal tax credits that can offset 50% of a project’s costs. But renewable developers say their costs are increasing faster than inflation and that the projects will “not be economically viable and would be unable to proceed to construction and operation under their existing pricing,” says Nyserda.
Irony alert: One reason is that the government-forced green energy transition is driving up demand for equipment, material and labor. “Growing demand for renewable energy projects nationwide ‘has exacerbated inflation for renewable project cost components relative to broader inflation levels,’” Nyserda says, citing the Alliance for Clean Energy NY.
Green energy developers are blaming Russia’s invasion of Ukraine for increasing demand for renewable energy and its components. But the real culprits are government mandates and subsidies, which they lobbied for. Developers also blame rising interest rates for increasing project costs. But as Nyserda notes, “it does not appear reasonable for developers to have assumed that a low interest rate environment would persist throughout the period in which their projects were to be financed, given that the levels of interest rates witnessed today are indeed precedented.”
The climate lobby says power from wind and solar is cheaper than from fossil fuels, but that’s true only with generous subsidies and near-zero interest rates. Price adjustments that renewable developers want in New York would make solar and wind two- to five-times more expensive than natural gas power.
Another irony: The IRA’s prevailing wage and domestic content conditions for bonus tax credits, which are necessary to make projects viable, inflate costs. That means U.S. taxpayers will pay more for the green corporate welfare, and utility ratepayers will pay more for renewable power. The climate lobby hits you coming and going.
Nyserda adds that “requests for inflationary relief on clean energy projects” have also been submitted in California, Connecticut, Hawaii, Indiana, Maine, Maryland, Massachusetts, Michigan, New Jersey, New Mexico, and Rhode Island, among other states. Electric customers will get no such relief when their bills increase.
Meantime, the computer chip maker Micron Technology recently disclosed that its planned factories in upstate New York, which are set to receive up to $5.5 billion in state subsidies, will consume as much power as New Hampshire and Vermont combined. Where will all the power come from?
Don’t be surprised if the state eventually asks New Yorkers to turn down their thermostats or turn off the lights at some hours of the day. The green energy crunch and bailout are coming.
The Wall Street Journal
