The latest Energy In Brief posting by the Energy Information Administration (EIA) is very instructive on the topic of U.S. government subsidies for energy. I consider it recommended reading for anyone who wants to understand the level of government investment and how it effects energy production in the U.S.

In total, renewable energies were subsidized to the tune of $4.8 billion in 2007. That number put renewable subsidies ahead of any other type of energy source by over $2 billion.

There is detail on the amount of subsidies per unit of production as well. Wind producers were paid $23.37 per megawatt hour. Solar producers were paid $24.34 per megawatt hour. Biomass and Geothermal were subsidized at a very paltry rate of $.89 and $.92 per megawatt hour respectively.

The posting covers all types of subsidized energy and also includes comparatively generous subsidies for refined coal ($2.37 billion) and natural gas ($2.149 billion). Because coal and natural gas are so heavily relied upon for electric generation the cost per megawatt hour for either of them is very low. Natural Gas is subsidized at $.25 per megawatt hour and Coal is subsidized at $.44 per megawatt hour.

The wind industry was the largest beneficiary among renewable industries having received $666 million in production credits in 2007.

According to a press release from Puget Sound Energy, “Prior to the revision, federal regulations (interpreting section 45 of the Internal Revenue Code) restricted federal tax credits for renewable energy production in a way that barred their use by utilities that were partnering with investors to generate renewable energy.”

Many larger utilities will sell their generated power to an affiliate company which then brokers the power on the open market. In order to qualify for the credit the final sale of the energy generated by the facility must be sold to a party unrelated to the utility. This allows the utility to sell the power to an affiliated intermediate party who can then broker the energy and complete the sale.