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Clean Power production tax credit for wind extended by one year

Published on January 2nd, 2013 | by Tina Casey

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Production Tax Credit For Wind Power Saved, For One Year

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January 2nd, 2013 by  

 
Supporters of the production tax credit for wind power can breathe a little easier, at least for now. Whatever else anybody says about the “fiscal cliff” legislation drama, in the end, our friends over at the American Wind Energy Association (AWEA) are sure in a celebratory mood. The final bill, signed by President Obama late last night, includes a provision that extends the production tax credit for wind power for one year.

Not only that, it changes from providing tax credits only to projects completed by the end of the year, to providing tax credits to any project started by the end of the year. AWEA fought specifically for that definition since it usually takes more than a year, and often up to two years, to develop a new wind farm.

production tax credit for wind extended by one year

Saving the Production Tax Credit for Wind Power

The tax credit was set to expire at the end of 2012. Without a prior guarantee that it would be extended, new activity in the U.S. wind industry had already slowed to a crawl, and many wind power workers had been laid off.

According to a press release issued by AWEA late last night, the future looks far brighter, at least for 2013:

“America’s 75,000 workers in wind energy are celebrating tonight over the continuation of policies expected to save up to 37,000 jobs and create far more over time, and to revive business at nearly 500 manufacturing facilities across the country. The extension of the wind energy Production Tax Credit (PTC), and Investment Tax Credits for community and offshore projects, will allow continued growth of the energy source that installed the most new electrical generating capacity in America last year, with factories or wind farms in all 50 states.”

Last-Minute Drama for Wind Power

Until yesterday, the picture was all gloom and doom for the wind industry. Operation Free, a military veteran-backed organization lobbying for wind power, was especially pessimistic. As recently as December 29, TheHill.com quoted Operation Free’s policy director, Michael Wu:

“Everything in a stopgap package would be geared toward keeping taxes from jumping on the middle class, which is why the AMT (alternative minimum tax) and payroll tax would likely be in but the PTC (production tax credit) wouldn’t.”

However, given the longstanding tradition of taxpayer subsidies for energy production of all types, extension of the tax credit for wind should never have been in doubt.

Part of the reason for subsidizing energy has to do with national security, and since renewable energy will play a key role in future security, bipartisan support is practically guaranteed (more on that later).

It’s also worth noting that the wind industry has adopted a leadership position in promoting wind jobs for military veterans, many of whom possess skills and training that fit a variety of careers in the wind power field.

More to the point, wind energy is not the exotic creature it was up until just a few years ago. It has broken into the mainstream of America’s energy landscape. Even as coal-fired power plants are shutting down, wind power nudged out natural gas for the most new generating capacity installed last year.

Wind power is also projected to provide about 20% of the country’s electricity needs by 2030.

Bipartisan Support for Wind

President Obama has been a strong advocate for public investment in alternative energy, including wind power, and practically all Democratic legislators favored extending the tax credit.

A number of key Republican legislators and governors also supported the tax credit, and last fall they participated in several high-profile lobbying efforts alongside Democrats.

Among the notables was Senator Chuck Grassley (R-Iowa), a strong and early advocate for wind power. In a recent interview with the Toledo Chronicle, Grassley said:

” … [A]s much energy as possible, both traditional and renewable, should be produced at home to create jobs and strengthen national security. Wind energy is a free resource, and it’s abundant in many places around the country … [A] clean renewable source like wind is not dependent on far-away countries with leaders who are hostile to the United States even as they take our energy dollars.”

…Or Not

Unfortunately, last year, many other Republican leaders in the legislature and in the pundit world took a vociferously negative stance against extending the wind power tax credit. It went all the way up to then-presidential candidate Mitt Romney, whose campaign repeatedly affirmed his opposition to extending the credit.

In the end, while the new “fiscal cliff” bill passed the Senate with overwhelming support from both sides of the aisle, it did not even win close to a majority of the Republican votes in the House.

Nevertheless, with a large majority of Democratic legislators voting in favor, the bill passed. And while many Republican legislators in the House failed to support it, they may have some ‘splaining to do in their districts back home, at least to the thousands of Americans — from turbine cowboys to hundreds of U.S. turbine manufacturers — whose livelihood depends on the wind industry.

Image: Wind farm by kevin dooley

Follow me on Twitter: @TinaMCasey

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About the Author

Tina Casey specializes in military and corporate sustainability, advanced technology, emerging materials, biofuels, and water and wastewater issues. Tina’s articles are reposted frequently on Reuters, Scientific American, and many other sites. Views expressed are her own. Follow her on Twitter @TinaMCasey and Google+.



  • kantilal

    I’ll fated Wind turbines could be used for producing energy through LIQUID AMMONIA.
    ANY AGENCY OR INSTITUTE interested can contact for further discussions by e mail. In this solution there is no need of WIND what so ever.
    Thanks

    Dr. K. Khatri
    kanti12us@yahoo.com

    18686652270

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  • CaptD

    The “near miss” that San Onofre just had, should be enough to convince all those that are not practicing Profitganda* that the sooner we start doing what Germany is doing, getting away from RISKY nuclear the better for our Country and the Planet.

    The wind blows for free, what does Nuclear cost US?
    Here is a great free eBook on what Germany is really doing:
    http://energytransition.de/
    + Salute to Bob Wallace for all his efforts!

    * http://www.urbandictionary.com

  • http://MrEnergyCzar.com/ MrEnergyCzar

    Geez, you’d think they’d get a few years to keep growing…. the fossil fuel industry would be up in arms if their subsidies were shortened to just 10 years…

    MrEnergyCzar

    • Bob_Wallace

      You think the short runs for wind might be due to fossil fuel interests pushing back on making the wind subsidies longer?

      Naw, a couple nice guys like the Koch brothers would never use their enormous wealth to lean on legislators to favor their fossil fuel interests…

    • http://zacharyshahan.com/ Zachary Shahan

      I know, it’s insane. Sometimes I feel like we’re living in fantasy land.

  • ytreggah

    In January of 2010 Vestas installed and sited two Vestas V 82 commercial wind
    turbines in Falmouth ,Massachusetts USA. The Massachusetts Technology
    Collaborative a semi quasi state agency sold the turbines into the Falmouth
    area. Today over one hundred residential homes are affected by infra sound.
    Negotiations have been going on over health issues from the turbines for eight
    months.

    The wind industry ,state and local officials ,semi-quasi state agencies
    encouraged by the Governor Patrick Administration’s goal to expand wind power
    continue to risk the health of citizens.

    Town Meeting Members and local
    politicians have to publicly recognize the physical illnesses and emotional
    suffering caused by operating wind turbines!

    The town is deliberately inflicting acute pain by one person on another for
    financial gain.

    The next Falmouth Wind Turbine Option Analysis Process, WTOP, meetings will
    take place on January 8 and 9 from 6-9 PM at the Falmouth Public Library in the
    Hermann Room.

    300 Main Street
    ,Falmouth,Massachusetts 02540

    All meeting documents and updates are posted on the project website:

    cbuilding.org/falmouthwind

  • http://www.facebook.com/matthew.t.peffly Matthew Todd Peffly

    So the big push will to get as many projects started as possible. If you can built say 2 projects a year. Just get 10-20 thru approval and push some dirt in order to “start construction”, then finish them over the next 5-8 years.

    • Bob_Wallace

      I missed this…

      “Not only that, it changes from providing tax credits only to projects completed by the end of the year, to providing tax credits to any project started by the end of the year.”

      That’s excellent. Thanks for pointing it out.

      I wonder what sorts of time lines might be in the bill. I doubt someone could toss a shovelful of dirt and wait for 20 years to do any more work.

      • Argyll12

        One year. The project must be started by the end of 2013 and completed by the end of 2014.

        • Bob_Wallace

          No.

          Project must “begin construction” before Jan 1, 2014. There is no completion date requirement.

          There may be some fine print that makes it important to complete construction by 2017 in order to receive all ten years of the PTC. I haven’t sorted that out yet. At this point it sounds like someone could start a project in 2013, not finish it until 2026, and get one year of PTC.
          Since wind farm completion time is about 1.5 years I suspect that 2017/2027 is not something worrisome.

          • Argyll12

            You’re right that’s unclear. However, The Act provides a one-year extension to the 50 percent bonus
            depreciation for qualifying property that is both acquired and
            placed in service before January 1, 2014. Certain long
            production-period property will be eligible for 50 percent bonus
            depreciation if it is acquired before January 1, 2014 and placed in
            service before January 1, 2015.

            http://www.mondaq.com/unitedstates/x/214548/Renewables/Production+Tax+Credit+for+Wind+Energy+and+Bonus+Depreciation+Extended

          • Bob_Wallace

            Good source, thanks.

            Yes, to qualify for the ITC (Investment Tax Credit) the facility must be in service before 2014. That does not hold for the PTC (Production Tax Credit).

            Wind farms have a choice between ITC and PTC, they cannot receive both. IIRC the ITC is attractive because it allows investors to use the credit to offset earnings outside the wind investment.

            A one year timeline for an ITC is unreasonable for wind. Few farms are built and brought on line in one year. A more reasonable requirement might be to allow the ITC in the year that the facility is completed.

            But we’re short years from needing no more subsidies for wind, so this is not likely a major problem.

    • Bob_Wallace

      Found some more info on the new PTC legislation. Apparently construction has to begin by Jan 1, 2014. There is no definition of “begin construction” in the bill. Neither is there any time by which the project has to be completed.

      “David Burton, partner at Akin Gump Strauss Hauer & Feld, says the act’s “begin construction” language may mean incurring 5% of the cost in 2013, which is how the Treasury interpreted the begin-construction rules for the Section 1603 cash-grant program.

      Just the same, the Treasury or the IRS will need to rule on the interpretation, Burton says, adding that the Joint Committee on Taxation, a group of tax lawyers that advise the Senate Finance Committee, could help to clarify the matter in a few weeks.

      As written, Burton says, the act does not include an end date. Therefore, savvy project developers could theoretically bank tax credits well into the future. For example, a wind farm owner could incur $5 million to purchase wind blades in 2013 and use those blades in a $100 million project that is completed in 2017. As currently written, the wind project would be eligible for 10 years of PTCs beginning in 2017.

      According to Burton, if a developer plans well and banks enough 2013 PTC-eligible component parts, it may be able to continue to construct PTC-eligible wind farms indefinitely.

      However, he cautions, “We do not know yet if the government will permit such an interpretation.””

      http://www.nawindpower.com/naw/e107_plugins/content/content.php?content.10917#.UOX0yORQX6c

      This seems to mean that wind farm developers could get enough work underway to carry them well into 2014 or later. Work won’t be disrupted by Congress’s diddling in late 2013/early 2014 as it was this year when projects had to be completed by the end of 2013 in order to receive the PTC.

      I suspect the jerking around of the wind industry is finished.

      Wind has already stated that they could operate without subsidies starting in 2018. That’s the same year that federal subsidies for solar go away.

      Starting in 2018 we could see non-subsidized wind and solar competing with subsidized fossil fuel and nuclear production. It’s going to be harder to justify subsidies for ff/nuke generation at that point.

  • wind neighbor

    Three comments have been deleted from this blog by individuals that are expressing a different view point. Clearly this is not legitimate avenue for discussion with censors who delete any comments that raise a question.

    • Bob_Wallace

      And additional off-topic comments will be deleted.

      If these posters continue to post their personal grievances they will be banned.

      Take your issues to where they belong – zoning boards and attorneys.

      • wind neighbor

        OK. I get it. You promote putting up wind turbines but you are not responsible for the aftermath of ruined homes, resulting health effects, and dislocated families? Irresponsible siting of wind turbines and inadequate zoning laws are YOUR problem as well, not just mine because I happen to live near a wind “farm”. That you censor comments from individuals who are actually living with the effects of wind energy undermines the validity of this blog. Comments that concern the downside of wind are on topic for those of us who actually live near turbines and speak from experience. It is not all about the $$$ signs and jobs, it is also about an industry that destroys homes and families. If you hope to continue to build wind turbines, siting and turbine noise regulations simply have to change…retroactively.

    • http://zacharyshahan.com/ Zachary Shahan

      We’ve covered these issues repeatedly — we have no inclination to spend hours a day repeating the facts.

      There is no scientific evidence that wind turbines have any negative health effects. Problems some people attribute to wind wind turbines are more likely to have been created by getting worked up psychologically about the issue.

      As Bob stated above, if you are such a person, you’ve got options available to you. Complaining about wind on sites like this simply isn’t going to get you anywhere — we’ve seen the studies.

  • wind neighbor

    I live within a mile of 3 GE Industrial sized turbines. The noise invades my private space, keeps me up at night, and has severely impacted my quality of life. My husband has experienced serious health effects which has left us little choice but to try and move. However, who would be willing to buy our home for what it is worth? There is no doubt that if we succeed in finding a buyer, we will lose the equity from our house which is our life savings. For those of you who are cheering on wind energy and the PTC extension, I ask you to take responsibility for the serious siting issues surrounding wind turbines. Current state noise regulations are outdated and do not protect nearby residents from the noise and infrasound which come hand in hand with industrial sized turbines. For each wind facility that is erected close to homes, anti-wind activists are born. Now is the time to break that cycle and inact laws that protect not only the individuals who are about to have turbines built near them, thanks to the PTC extension, but also for the individuals who are currently living close to turbines. As is, the AEWA is eager to sweep us under the rug. The like to talk about job created with wind energy, but they neglect to comment on the number of homes and families destroyed in the process.

  • its_me_baby9

    This is the best news in the deal. It’s time to help renewables have the same fighting chances as the rich energy source industry, the Oil Cartels.

  • http://www.facebook.com/art.lindgren Art Lindgren

    This is very bad news for people who end up living next to (very near) new industrial wind turbine sites. Turbine noise disrupts sleep, people get sick, they can’t sell because no one will buy their house, so they can’t move away, their house is now worthless, they have lost to the wind developers (supported by your and my tax dollars) their major asset – likely most of their net worth. This is ruinous of health and is a financial disaster for the relatively small number of people (meaning – so few that they have no real voice) who end up living near these turbines. Their house and health have been stolen from them by the wind
    industry.

    This is not fair and it is not right and it is not what anybody, other than the predatory wind companies, want. Do you want this? Certainly the wind companies don’t want this advertised, that they prey on these few number of people. How could they afford to buy up these properties and still be able to pocket all those taxpayer dollars? But think how awful this is for the family with a turbine 900 ft. from the house. Devastating.

    How else can we help these families other than to stop the Wind Production tax Credit? This is very bad news for homes in the path of oncoming wind energy development. I and a lot of others have already lost our homes, but the PTC enables wind companies to develop further sites near peoples’ homes, and we need to save them from financial devastation. The onus is clearly on us to fix this ruinous policy. Let’s all get on it and come up with a solution. In the meantime, are we glad for the trade-off here?

    Here’s a quote to ponder:
    “A subset of society should not be forced to bear the cost of a benefit for the larger society.” – From: One Page Takings Summary: U.S Constitution and Local Land Use, by: George S. Hawkins, Esq., Stony Brook-Millstone Watershed Association

    But the wind industry thinks it’s quite acceptable for up to 10% of the population to be in this “residential sacrifice zone”.

    This is a quote from George Baker, Fox Islands Wind, Vinalhaven, Me.
    “Do we want to set rules that make it impossible to do something that’s really good for a community because 10 percent of the people are bothered by it?” Baker asked.
    Originally published by TUX TURKEL Staff Writer. Portland Press Herald
    01-24-2010

    • SecularAnimist

      With all due respect this is anti-wind propaganda and a load of malarkey. The supposed “ruinous” effects on health do not exist, as multiple studies have shown. And note that the author of this comment provides NO actual evidence of any negative impact on property values of homes near wind turbines (very few of which are located anywhere near homes, anyway). These sorts of comments are, all too often, fake astroturf NIMBYism funded by the fossil fuel corporations.

      • Bob_Wallace

        This site has run out of it’s 2013 reserve of tolerance for anti-wind tin foil hat comments.

        If you have a legitimate problem with someone installing a turbine too close to your house then either a) hire an attorney and sue the turbine owner or b) accept the fact that you got shafted, eat the loss and move.

        If you can do neither of the above, get a noise cancelling device. Even very cheap ear plugs should let you sleep comfortably.

        You have our sympathy but you have no forum here for your complaints.

        You have a zoning problem, not a wind turbine problem. You would be in the same position had someone started a pig farm too close to your house. The quality of your life would be diminished and the value of your home reduced.

        • wind neighbor

          If someone put a pig farm near my home, there are ordinances to protect me. This is not true with 400 foot wind turbines where the wind industry has pushed for state regulations that allow for turbines to be erected too close to homes. As much as you would like to deny it and foist these tremendous and expensive issues on individuals who happen to have homes where wind turbines are sited, this IS most definitely a problem concerning inappropriate industry standards.

  • EJHunt

    Excellent news for the industry, for job preservation (and creation), and clean energy in general. Like everything else in Washington it came down to the 11th hour (literally), but that’s to be expected these days. Now to work on extending it for a few years, rather than 12 months, and developing a longer-term phase-out framework.

    • Bob_Wallace

      The wind industry laid out a path to eliminating subsidies that they could live with. As I recall it called for two years of full 2012 level support and then a reduction each year until the subsidies were gone in 2018. A five year phase out.

      Were a plan like that to be implemented the industry could get on with getting all the infrastructure in place so that subsidies weren’t needed and the annual jerking around by Republicans would go away. We’d get a lot more wind installed much faster.

      Solar subsidies end, I believe, in 2017. We’re short years from the point at which the main renewables no longer need taxpayer support.

      Fossil fuels and nuclear will continue to not be able to stand on their own feet.

      • EJHunt

        Agreed. AWEA’s five-year phaseout idea was a bold move – perhaps the first time an energy organization proposed its own subsidy sunset. But if the industry at this tipping-point stage were given longer-term financial certainty, then economies of scale and technology improvements would give it a fighting chance of standing on its own without the PTC.

        • Bob_Wallace

          Sometime back they made a comment that they needed only a few more years, three was the number I recall, but they didn’t seem to repeat that number.
          I think it a good indication that wind is almost ready to compete without subsidies against subsidized coal, natural gas and nuclear.

        • photosymbiont

          Exelon’s response to the AWEA proposal was amusing and also instructive. “The proposal which the American Wind Energy Association (AWEA)
          has offered for ‘phasing-out’ the federal wind energy production tax
          credit (PTC) is completely unacceptable…(Dec 13 2012)”. Exelon was recently kicked off the AWEA board (even though they own about 2% of US wind capacity). Exelon’s primary focus is nuclear power, that is, the most highly subsidized form of energy generation in the U.S. It would be nice if reporters and bloggers would ask Exelon executives if they’d be willing to give up Price-Anderson liability protection for their reactors in exchange for the elimination of the wind PTC. That would be good for a few laughs, at least.

          • Bob_Wallace

            *Here’s an interesting little tidbit concerning Exelon and nuclear…* *
            ““Let me state unequivocably that I’ve never met a nuclear plant I didn’t like,” said John Rowe, who retired 17 days ago as chairman and CEO of ExelonCorporation, which operates 22 nuclear power plants, more than any other
            utility in the United States.

            “Having said that, let me also state unequivocably that new ones don’t make any sense right now.”

            “I’m the nuclear guy,” Rowe said. “And you won’t get better results with nuclear. It just isn’t economic, and it’s not economic within a foreseeable time frame.””
            http://www.forbes.com/sites/jeffmcmahon/2012/03/29/exelons-nuclear-guy-no-new-nukes/ *
            *
            *
            *In addition about a quarter of all US nuclear plants are struggling to stay in business due to their high operating expenses. They can’t compete with cheaper wind and natural gas prices.*
            *
            *
            *”**”Even plants with no pressing repair problems are feeling the pinch, especially in places where wholesale prices are set in competitive markets. According to an internal industry document from the Electric Utility Cost Group, for the period 2008 to 2010, maintenance and fuel costs for the one-fourth of the reactor fleet with the highest costs averaged $51.42 per megawatt hour. *
            *
            That is perilously close to wholesale electricity costs these days.””* *
            *
            * http://www.nytimes.com/2012/10/24/business/energy-environment/economics-forcing-some-nuclear-plants-into-retirement.html?_r=1 *

  • http://www.sepco-solarlighting.com/ Liz Karschner

    This is great news! Hopefully this will keep the installations of wind power increasing and provide additional renewable energy sources much needed here in the US.

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