Federal Wind Energy Tax Credit Set To Expire
December 30, 2012

Wind Energy Firms Scrambling To Complete Projects By Year’s End

redOrbit Staff & Wire Reports — Your Universe Online

As 2012 draws to a close, American energy companies are racing to complete wind turbines in order to take advantage of a federal tax credit that expires once the clock strikes midnight on December 31.

According to Matthew L. Wald of the New York Times, developers will need to have their wind farms fully operational before Tuesday in order to take advantage of a special wind energy tax credit.

Companies that meet the deadline will be able to take a 2.2 cent tax credit for each kilowatt-hour worth of wind power produced during the first 10 years of operation, Wald said. That could amount to as much as $1 million for a large turbine, but turbines that are not operational before the start of 2013 are not eligible, he added.

"Congress, which last renewed the credit as part of the 2009 fiscal stimulus package, balked at an extension this year," the Times reporter explained. "Opponents argue that the money spent so far, about $14.7 billion, is enough, and that a renewal could cost about $12.2 billion were it to last for 10 years. They also complain that the credit allows wind machines to be profitable even when there is a surplus of electricity and the market price for it falls to zero.

"The tax credit could be equal to one-sixth to one-half of the revenue from the wind turbine, depending on electricity prices in the area of the generator," Wald added. "Wind advocates say that the wind production tax credit did not cost the taxpayers any money, because it stimulated economic activity, in the form of manufacturing and construction, that was taxed at the federal, state and local levels."

The tax credit amounts to about 30 percent the cost of building a large turbine, BBC News Environment Correspondent Matt McGrath said on Friday. It has lapsed three times previously - in 1999, 2001, and 2003, and each time it led to a drastic reduction in the number of wind farms being built in the US. Industry officials are hopeful the incentives will ultimately be renewed.

"There's a good chance we could get this extension, it is very hard to predict, but the industry is not making bets on the Congress getting it done," Rob Gramlich, senior vice president at the American Wind Energy Association told the BBC.

However, McGrath notes that even if such an extension were to be approved, "there is likely to be a significant curtailment of wind installations in 2013. Wind energy companies say they need longer time frames to negotiate deals to sell the power they generate."

As manufacturers rush to complete their projects before the deadline, the construction of wind turbine facilities has been outpacing that of new natural gas plants in recent months, Ehren Goossens and Christopher Martin of Bloomberg News reported earlier this month.

"New wind capacity reached 6,519 megawatts by Nov. 30, beating the 6,335 megawatts of natural gas additions and more than double those of coal, according to data from Ventyx Inc.," they said. "A surge of wind-farm connections in November and December could double the amount of wind capacity added this year to as much as 12 gigawatts, according to New Energy Finance."