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Wind Tax Credit Extended

As part of the midnight deal resolving some of the tax issues dubbed the “fiscal cliff,” Congress extended the wind energy production tax credit (PTC) for one year.

More importantly, the bill’s tax extenders package granted the $0.022 per kilowatt-hour tax credit to the electricity wind projects generate over the first ten years of their production service to wind farms which are “under construction” by the end of 2013.

The same debate will have to happen in a year, but the wind industry could definitely utilize the extra time. This is a critical change from the previous language in the PTC legislation which required projects to be “in production” by the end of the incentive’s specified term.

In the absence of certainty in the wind industry due to the lack of wind energy promotion from the federal government, i.e. the wind PTC extension, wind developers were hesitant to place orders for turbine machinery which would take longer to construct than time allotted. However, with the change in the PTC language, even before any machinery is delivered to wind developers and consumers, it will count as “under construction,” thus allowing for the PTC to have an effect on the total costs.

Manufacturing and development times of eighteen to twenty four months would make it almost impossible to get projects “in production” by the end of 2013, but getting some “under construction” by December 31, 2013 is not beyond reach.

While some may see the change in language as an exploitation of a loophole, or a “seedy” manner in which to conduct business, the wind industry becoming a strong, legitimate part of the United States economy is of critical importance toward energy independence.

Another benefactor of the PTC extension, which will also contribute to energy independence, is the U.S. geothermal industry.

“Congress’ action will spur significant new employment,” noted Geothermal Energy Association CEO Karl Galliwell. “Consumers and utilities will benefit, as well, because developers will have greater certainty about whether the credit will be available for their project.”

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