IRS Gives Wind Power A Raise

Wind power producers just got a raise from the U.S. Treasury.

The production tax credit for renewable energy is increasing from 2.2 cents per kilowatt hour to 2.3 cents/kWh, the Internal Revenue Service said this week in a federal filing.

This ticking-up of the credit isn’t a new thing; the PTC for renewable energy dates back to the Energy Act of 1992 and even though it has occasionally lapsed, it has always been pegged at 1.5 cents/kWh in 1993 dollars. So periodically, to keep pace with inflation, it goes up. According to North American Windpower, the IRS raised the credit by a tenth of a penny in 2010, to 2.2 cents/kWh, after raising it a tenth in 2008 to 2.1 cents.

wyoming wind farm

image via Shutterstock

Over the years, the PTC has been available to other resources beyond wind – including, for a time, solar – and the geothermal industry was among those who recently celebrated the extension of the credit beyond its Dec. 31, 2012, expiration.

Renewal of the credit came as part of the New Year’s fiscal cliff deal hammered out by the president and Congressional leaders. The one-year extension made facilities that are under construction before Jan. 1, 2014, eligible for the 10-year credit, whereas the version of the law that expired at the end of 2012 required facilities to be operating by the deadline.

The Joint Committee on Taxation last August had 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.

A fresh report from the Government Accounting Office [PDF] said that in fiscal 2011, the PTC cost the government $1.56 billion, of which $1.1 billion went to the wind industry.

While the industry comes back from the dislocation caused by the near-expiration of the PTC, the tax break has continued to come under attack in Washington. In late March, Tennessee Republican Lamar Alexander introduced legislation that would repeal an excise tax on medical devices that was contained in President Obama’s health insurance overhaul, and pay for that repeal by ending the PTC.

“The federal government’s taxpayer subsidy of wind is interfering with the marketplace,” Alexander said in a statement. “After receiving the subsidy for 20 years, the wind industry produces only 9 percent of our pollution-free electricity. It’s time for wind power to take its place in our free-market system and compete with natural gas, nuclear and coal.”

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.