Biden's Green Energy Inflation Reduction Act Needs A Big Bailout Already

Tyler Durden's Photo
by Tyler Durden
Wednesday, Sep 06, 2023 - 12:25 PM

By Mish Shedlock of MishTalk

Surprise, surprise. Subsidies were not enough to make Biden’s energy projects profitable.

The Coming Green Energy Bailout

Taxpayers will soon be on the hook for The Coming Green Energy Bailout

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.

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.

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?

The speed at which these projects blew up seems stunning. But it really isn’t.

EVs, solar, and wind projects don’t scale. Heck, they don’t scale even with subsidies. I have been saying this for months.

Needed minerals and and skilled labor are in short supply. The US is still dependent on China and other foreign countries for materials.

Biden has escalated trade wars with China, but China hasn’t even retaliated much yet. It can with rare earth elements.

Everything Biden does leads to more inflation.

Electric Vehicles for Everyone?

On July 19, I asked Electric Vehicles for Everyone? If the Dream Was Met, Would it Help the Environment?

My follow-up post was What Do MishTalk Readers Think About “Electric Vehicles for Everyone?”

Math Does Not Add Up

The EV math does not add up in the EU or here. But here we go anyway.

The Shocking Truth About Biden’s Proposed Energy Fuel Standards

In case you missed it, please consider The Shocking Truth About Biden’s Proposed Energy Fuel Standards

The National Highway Traffic Safety Administration NHTSA did an impact assessment of 4 fuel standard proposals and compared them to the cost of doing nothing. Guess what.

The NHTSA conclude: Net benefits [of stricter mile standards] for passenger cars remain negative across alternatives” vs doing nothing at all.