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January 17, 2013
New life for wind power incentive

The American Taxpayer Relief Act of 2012 (HR 8),the official title of the bill that kept the nation from tumbling off the fiscal cliff, contains extensions of multiple tax breaks to incentivize energy programs.  Probably the most notable action is a 1-year extension of the production tax credit (PTC) for wind power projects.   The wind power industry generally views the PTC as essential to the growth of the sector.  With the possibility of the PTC ending, major projects were put on hold.  The American Wind Energy Association (AWEA) stated that termination of the PTC would endanger half of the 75,000 jobs in the U.S. wind energy sector.

In addition to the wind energy PTC, Title IV of HR 8 extends tax breaks for energy-efficient new and existing homes, alternative fuel vehicle refueling property, 2- or 3-wheeled plug-in electric vehicles, production of cellulosic biofuel, cellulosic biofuel plant property,  biodiesel and renewable diesel, Indian coal facilities placed in service before 2009, paper recycled at municipal solid waste facilities, certain closed-loop biomass facilities, geothermal facilities, incremental hydropower production, energy-efficient appliances, and alternative fuels. 

Start of construction

The actual credit amount varies by energy source.  For wind, closed-loop biomass, and geothermal energy, the credit is 2.2 cents per kilowatt hour (kWh).  For the remaining technologies (e.g., qualified hydroelectric, municipal solid waste), the credit is 1.1 cents per kWh.  One major PTC revision for wind allows the credit to take effect at the start of construction rather than when the project is placed in service.  The AWEA notes that companies that manufacture and install wind turbines sought this change to allow for the 18 to 24 months it takes to develop a new wind farm.  U.S. companies are now producing nearly 70 percent of domestic wind turbines, adds the AWEA.

“America’s wind energy workers have been living under threat of the PTC’s expiration for over a year, and layoffs had already begun as companies idled factories because of lack of orders for 2013,” says the AWEA.  “Uncertain federal policies have caused a boom-bust cycle in U.S. wind energy development for over a decade.”

The AWEA adds that in the closing days of the 2012 Congress, the 2,000 companies that belong to the AWEA have sent delegations to Capitol Hill repeatedly, invited lawmakers on tours of wind farms and factories, and delivered hundreds of thousands of letters to constituents.

Click here for HR 8.

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