Wind Power Tax Break Extended Through 2013

The fight over the immediate future of wind energy policy in the U.S. ended with victory for the industry late Tuesday night when the House followed the Senate’s lead and passed a fiscal cliff deal that includes a one-year extension of the production tax credit. President Obama was expected to quickly sign the bill [PDF].

The one-year extension wasn’t the long-term fix that wind developers and manufacturers were hoping for, and it probably sets the stage for more fights down the road. But the industry staved off disaster and, on the plus side, 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.

Katana Summit turbine tower plant, Nebraska (image via Nebraska Dept. of Economic Development)

Katana Summit turbine tower plant, Nebraska (image via Nebraska Dept. of Economic Development)

That change could allow developers to squeeze many more qualifying projects into the pipeline, since large projects can take more than a year, sometimes several years, to build.

“On behalf of all the people working in wind energy manufacturing facilities, their families, and all the communities that benefit, we thank President Obama and all the Members of the House and Senate who had the foresight to extend this successful policy, so wind projects can continue to be developed in 2013 and 2014,” Denise Bode, the outgoing CEO of American Wind Energy Association, said in a statement.

The AWEA says 75,000 people work in the wind energy industry in the U.S., and that half those jobs were at risk if the PTC was abandoned.

The months leading up to the end-of-2012 expiration saw a rush to get new projects up and running out of fear the subsidy would vanish, and wind was expected to account for 45 percent of U.S. electricity generating capacity added in 2012, more than any other fuel source, according to the Energy Information Administration.

The PTC also became a political issue in the 2012 campaign, one that was especially potent in states such as Iowa and Colorado, where manufacturers of things like turbine towers, blades and nacelles had set up shop. Orders had begun drying up for projects planned for 2013 and beyond, and thousands of jobs were shed, seemingly fulfilling the AWEA’s dire prophecy of a PTC cliff.

As for the cost of the PTC extension, the Joint Committee on Taxation in August estimated that modifying the expiration date to make turbines under construction by the end of 2013 eligible would cost the federal government $116 million in 2013 and a cumulative $12.1 billion by the end of 2022.

In addition to extending the PTC, the fiscal cliff deal also included an extension of the investment tax credit for offshore wind development. The 30 percent credit is available to projects that begin construction before the end of this year. The hefty tax break has actually been around since 2009, but with U.S. projects stuck in the planning stages, has been unused. That might – might – change this year: Deepwater Wind, for one, has said it intends to begin building a 30-megawatt wind farm off Rhode Island’s Block Island this year and have it operating in 2014.

Sports columnist, newspaper desk guy, website managing editor, wine-industry PR specialist, freelance writer—Pete Danko’s career in media has covered a lot of terrain. The constant along the way has been a fierce dedication to knowing the story and getting it right. Danko's work has appeared in Wired, The New York Times, San Francisco Chronicle and elsewhere.

    • http://www.facebook.com/people/Alex-Lester/100001046509730 Alex Lester

      Well this is a reasonable policy, but wind tax credits must be phased out. Feed in tariffs should replace them as those who “benefit” from wind pay for it.

      • http://www.facebook.com/ts3333 Terry Lawrence Sutton

        If the Auto industry gets all that free money wastefully then at least wind energy should get it for the good. Green energy is here to stay.

      • http://www.facebook.com/petedanko Pete Danko

        Thanks for your comment, Alex. The industry has proposed gradually reducing the subsidy until it is no longer available, ending completely with turbines put into service after 2018. See this story: http://www.earthtechling.com/2012/12/wind-industry-offers-ptc-phase-out-plan/

    • http://www.facebook.com/ts3333 Terry Lawrence Sutton

      Thank GOD maybe I can return to work now along with about 37,00 others that was laid off.

    • http://MrEnergyCzar.com/ MrEnergyCzar

      Imagine if the Wind industry got the equivalent of what the oil industry gets? Permanent free overseas military protection services, $32 Billion a year…

      MrEnergyCzar

      • http://www.facebook.com/petedanko Pete Danko

        That could pay for a lot of wind turbines….