Renewable energy, particularly wind and solar power, is receiving substantial subsidies in many countries worldwide. Unfortunately, wind and solar energy are unreliable and very expensive, so consumers are paying higher rates than needed for electricity, which may result in brownouts and blackouts. Wind and solar only exist because of government subsidies and mandates, without which they could not begin to compete with reliable and affordable energy sources such as coal, natural gas, and nuclear power, which generate roughly 80% of U.S. electricity. Warren Buffett has notably remarked that wind energy would not be feasible without tax credits, which benefit his own company.
In the United States, new Treasury Department figures show that subsidies for wind and solar dwarf all other energy-related provisions in the tax code, costing $31.4 billion in 2024, and are expected to cost taxpayers $421 billion more between 2025 and 2034 based on the subsidies in the Biden-Harris climate bill, the Inflation Reduction Act. The 10-year cost of federal tax expenditures for wind and solar has increased 21-fold since 2015. Federal tax expenditures for the investment tax credit (ITC) and production tax credit (PTC), which are the primary drivers behind the deployment of wind and solar energy, are, by far, the most expensive energy-related provisions in the federal tax code. Between 2025 and 2034, the ITC and PTC will account for more than half of all energy-related tax provisions. That total does not include the tax credits for electric vehicles, which amounted to $14 billion in 2024 and are expected to cost $105.7 billion between 2025 and 2034. The higher energy prices resulting from the deployment of wind and solar energy are rapidly deindustrializing European economies, leading the charge towards “net zero.”
In 2024, subsidies for renewable energy under the Contracts for Difference (CfD) scheme in the UK reached an all-time high. Through this program, the UK government provides financial support to renewable energy projects by ensuring they receive a fixed payment for the electricity they generate, typically for 15 years. This cost is eventually passed on to consumers through their energy bills. The previous record, set in 2020, was just under £2.3 billion ($2.88 billion), while the total for 2024 is projected to rise to £2.4 billion ($3 billion). Additionally, the Office for Budget Responsibility anticipates that subsidies for other programs, including the Renewables Obligation Scheme, the Capacity Market, and the Warm Home Discount, will hit record levels in 2024. Current high subsidy levels come on top of market prices that are still relatively high. For example, UK industrial users pay rates 4 times as high as their U.S. counterparts, obviously affecting competitiveness.
Further, the UK recognizes that far more funding is needed to decarbonize the electric grid by 2030. According to an analysis by Cornwall Insight, an energy consultancy, subsidies to the developers of wind and solar over the next two years need to be at least double this year’s record level if the government is to reach its clean power goal by the end of the decade. The London Times reports:
“According to estimates by the National Energy System Operator, which is responsible for keeping the lights on in Britain, offshore wind would need to quadruple to up to 50 gigawatts, onshore wind double to potentially 27 gigawatts, and solar triple to up to 47 gigawatts to achieve a target of 95 percent of the UK’s electricity from green sources alongside a ‘strategic reserve’ of gas. A ‘strategic reserve’ for natural gas is needed to produce power when the wind does not blow and the sun does not shine.”
According to Tim Dixon, senior consultant at Cornwall Insight, increasing the budget for the Contracts for Difference would not ensure the level of renewables needed. He said:
“You need to have the equivalent volume of assets come through the planning and grid connection stages of their development … and at the moment, the volume of renewable assets coming through the planning system and having the required connection dates doesn’t look to be sufficient to reach the ambitions that are laid out in the clean power 2030 action plan.”
British consumers also pay wind farms when they need to reduce output to stabilize the grid, with the discarded power increasing by 91% in 2024 over 2023. In 2024, the British consumer paid more than £393 million ($491 million) in direct costs—and much more in indirect costs—to discard 8.3 terawatt hours of wind energy, up from 4.3 terawatt hours of wind-generated electricity in 2023 at a direct cost of £310 million ($388 million). The prices being charged by wind farms to reduce output fell in 2024 despite the rising subsidies.
Conclusion
Wind and solar energy are expensive, with many hidden costs in massive subsidies, government mandates, payments for discarded energy, transmission line additions, and health costs due to noise and vibration, among other non-direct costs. Yet governments, particularly in Western countries, continue pursuing such power through ever-increasing decarbonization goals to meet commitments to the U.N. Paris climate accord and rising subsidies. In the UK, subsidies set a record in 2024 for the Contracts for Difference scheme, and other subsidies are expected to do likewise. In the United States, the PTC and ITC reached over $31 billion in 2024, and those subsidies are expected to cost the U.S. taxpayer $421 billion between 2025 and 2034, accounting for more than half of all energy-related tax provisions without including the tax credits for electric vehicles.
However, these subsidy amounts will not meet climate goals. It seems that the higher the subsidies for and dependency upon wind and solar become, the more outlays from the government and consumers are necessary to reach “net zero.” Rising electric rates from wind and solar power and government expenditures also lead to stifled economic growth, which thwarts economic investment, now seen throughout much of Europe.
