Wind Fight’s Next Round Likely To Wait Until ’14

The Solyndra silliness having faded behind a wave of loan guarantee success stories, last year’s hottest renewable energy political potato was the production tax credit for wind power. As it headed toward a Jan. 1, 2013, expiration, it was an issue in the presidential campaign and then the subject of plenty of breathless stories as Congressional negotiators went back and forth on it right into the new year.

Ultimately extended for a year, the PTC is now once again headed toward expiration – but don’t expect the same kind of hubbub to develop that we saw last year. Not yet.

awea wind power

U.S. wind power under construction (image via AWEA)

The big industry trade group, the American Wind Energy Association, wants an extension, but in a statement to the Washington-insider website Political.com on Monday, signaled that it doesn’t necessarily have to happen in the next few months. AWEA CEO Tom Kiernan told Politico “that it’s ‘essential’ that the PTC is extended by the end of 2014.”

The less intense sense of urgency this year is a result of what we from the start identified as a key component of the deal reached as the new year dawned last January: the extension made facilities under construction before Jan. 1, 2014, eligible for the 10-year, 2.3 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.

What exactly it means to be under construction was largely left to the Internal Revenue Service to define, and the industry seems pleased with the IRS guidance. A key test the IRS is using: that developers have incurred 5 percent of costs by Jan. 1, 2014. Having done that, developers would then have to make a “continuous effort” to complete the facility. On that latter point, the IRS has said, if the facility is in service before the end of 2015, it will definitely meet the “continuous effort” requirement.

Given all that, the industry says the pipeline of projects is refilling and things should stay active through 2014.

Meanwhile, on Capitol Hill, Politico said, “One Senate aide said tax writers in Congress aren’t even talking about a year-end extenders package, which traditionally allows for the continuation of credits like the PTC.”

While the AWEA appears to be conceding to the reality that it won’t get an extension by year’s end, it is still making the case that the sort of PTC dysfunction that happened last year can have untoward economic impacts. AWEA analyst Elizabeth Salerno told us in an interview recently that while installation of turbines can eventually bounce back from delays in renewing the PTC, that’s not always the case with the industry supply chain. That’s because those companies need more confidence in steady, long-term future growth in order to invest in manufacturing capacity.

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.