Higher middle-class taxes and expensive milk weren’t the only things averted in the “fiscal cliff” deal Congress passed late Tuesday night. The legislation also included the long-sought extension of tax credits that could have sent America’s burgeoning wind energy industry into free fall if not renewed.
The extension of the production tax credit (PTC) and Investment Tax Credit (ITC) is expected to save up to 37,000 jobs and create far more over time, and to revive business at nearly 500 manufacturing facilities across the country, reports Renewable Energy World. Wind energy PTC and ITC for community and offshore projects, will allow continued growth of the energy source that installed the most new electrical generating capacity in America last year, according to the American Wind Energy Association (AWEA).
Under federal law, the Production Tax Credit provides an income tax credit of 2.2 cents per kilowatt-hour for the production of electricity from utility-scale turbines. This incentive was created under the Energy Policy Act of 1992, and PTC applies for the first 10 years of electricity production. Additionally, through Section 1603 of the American Recovery and Reinvestment Act of 2009, wind project developers can choose to receive a 30% investment tax credit in place of the PTC.
What this means:
Although the January 1 decision wasn’t the long-term solution that the wind energy industry wanted, even the year to year tax extension cycle is better than allowing the credit to expire. Still, the uncertainty that preceded the vote to extend has already taken its toll on the industry.
Many of America’s leading wind energy companies had already started to lay off employees in anticipation of the tax credit expiration. This in turn has taken a bit out of the industry’s potential growth in 2013. “Because wind manufacturing and development takes twelve months to twenty-four months to get geared up and producing, consultants predict it will drop from this year’s likely ten-plus gigawatts to, at best, three gigawatts,” reports EarthTechling.
Still, “the extension makes facilities that are under construction before Jan. 1, 2014, eligible for the 10-year, 2.2-cents per kilowatt-hour credit, whereas the version of the law that expired at the end of 2012 required turbines to be operating by the deadline,” writes Pete Danko.
Hundreds of U.S. factories in the wind energy supply chain, not to mention the future of this popular renewable energy source, would have been at stake had the PTC been allowed to expire, according to a study by Navigant Consulting [PDF].
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