Wind Industry Offers Tax Break Phase-Out Plan

Opponents of an extension of the wind energy production tax credit have been asking, “When will it ever end?” Well, the industry has responded, releasing a plan on Wednesday that would extend the PTC past its end-of-year deadline, but gradually draw it down until it disappears for projects not in service before 2019.

“Analytical results indicate that a PTC beginning with 2.2 cents per kilowatt-hour, or 100% of the current level for projects that begin construction in 2013, followed by 90%, 80%, 70%, 60%, and then 60% of the current level for projects that are placed in service in years 2014 through 2018, with no PTC in 2019 or afterwards, would sustain a minimally viable industry, able to continue achieving cost reductions,” the American Wind Energy Association wrote in a letter [PDF] to Congressional committee leaders.

PTC wind

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Companies whose projects qualify for the PTC can receive the tax break for the first 10 years of a project’s operation.

The PTC was first enacted in 1992, but it’s always been a short-term measure, typically running for two years, and has lapsed three times, the last time in 2004. The industry has argued that the impending expiration will cost some 37,000 jobs. Whether that number is on target or not, projects have already been put on hold and job losses have been piling up. The green business advocacy group E2 said last month that through the third quarter of this year, at least 3,240 wind jobs had disappeared.

The wind PTC is the rare green energy policy that enjoys some bipartisan support, but so far it hasn’t had quite enough backing among Republicans to allow an extension to make it through Congress. The president is a strong supporter of the measure.

In August, the Senate Finance Committee included a one-year extension of the PTC in a big “tax extender” package. That legislation included a significant shift, from requiring projects to be in service in 2013 to simply requiring that construction begins before the end of the year. Speculation has been that such an extension, if it were to happen, would be included in a larger “fiscal cliff” deal.

AWEA CEO Denise Bode said the industry undertook a study of a phase-out plan several months ago.

“We began this process in order to be a part of the solution on our nation’s fiscal challenges, while creating needed stability for wind industry development, both of which are concerns for our industry. We wanted to take this head-on, as part of our patriotic duty as well as our duty to the industry.” Bode said in a statement. “We completed the analysis, and this is what it identified as necessary for at least a minimally viable industry.”

Pete Danko is a writer and editor based in Portland, Oregon. His work has appeared in Breaking Energy, National Geographic's Energy Blog, The New York Times, San Francisco Chronicle and elsewhere.

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