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Wind Industry Breathes a Sigh of Relief from Edge of Fiscal Cliff

Wind Industry Breathes a Sigh of Relief from Edge of Fiscal Cliff

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 details:

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].

 

Related Reading:

Offshore Wind Energy Picking Up Speed

Romney Reverses Self On Wind Power

While Digging His Golf Course, Trump Says Wind Farms Are Destroying Scotland

 

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63 comments

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2:28AM PST on Jan 29, 2013

Not sure about the economic benefits or lack thereof of subsidies, but I am in favour of green energy.

4:54AM PST on Jan 14, 2013

At this time of great debt, we need to stop ALL subsidies to all companies!

8:53PM PST on Jan 10, 2013

Thanks

11:55AM PST on Jan 9, 2013

We could say that of almost every major company that was incubated by the government in its infancy, That includes Oil. It was a need the government considered very important to the future of our county. Wind and solar are in the same spot the other energy companies used to be in. Give it a rest.

11:36AM PST on Jan 9, 2013

Noted

10:06AM PST on Jan 9, 2013

Wind energy has a dismal future, a drain of financial resources, especially the tax dollars being pumped into the industry.

Just as you are against ANY subsidies for Oil and Gas, I am against subsidies for ANY energy companies.

We need cheap energy to help fuel an economic recovery, and we are going backwards, spending more on subsidies than we are gaining in energy output.

Solar is not much different. Until natural energy production FAR exceeds what it costs today, especially for me with less than $0.10 per KWH, or efficiencies greatly increase, we are simply taking money out of the market, via taxes, to subsidize and industry that wouldn't even exist without Federal assistance.

DC should NOT be "in the business" of creating markets, manipulating demand, or investing in what should be PRIVATE industries.

While it may "sound" great to be producing renewable energy, the economic impact is detrimental to growth. Emotion is NOT a justification for DC wasting our tax dollars that should be used for Healthcare and boosting the less fortunate.

At $18 billion in credits, and 37,000 jobs, that is almost $500,000 per job. Can I have one of those???? It is a waste of money that should be used elsewhere. That $18B would feed a 1,000,000 families with $18K per year.

1:48PM PST on Jan 8, 2013

Thanks

6:09AM PST on Jan 8, 2013

thank you

5:10AM PST on Jan 8, 2013

ty

1:25AM PST on Jan 8, 2013

Thank-you for the interesting article.

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Beth Buczynski Beth is a freelance writer and editor living in the Rocky Mountain West. So far, Beth has lived in... more
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