Clean Power

Published on December 13th, 2012 | by Zachary Shahan


Wind Tax Credit? AWEA Is Up For A 6-Year Phase-Out

December 13th, 2012 by  

Here’s some big news from the American Wind Energy Association (AWEA) regarding the hugely important wind power production tax credit, which has stimulated a tremendous amount of wind power growth and job creation over the past several years:

Analysis: Six-year phase-out of wind energy Production Tax Credit would enable U.S. industry to become fully cost-competitive

WASHINGTON, D.C., December 12, 2012 – The American Wind Energy Association today described what a future phase-out of its primary federal incentive could look like, saying “we’re already showing we’re a leader in innovation. Now we’re showing we’re a leader in addressing the country’s fiscal issues.”

Denise Bode, AWEA’s CEO, stressed that, “At the same time, our number one priority right now is not putting the wind industry over its own fiscal cliff.

“Congress must extend the wind energy Production Tax Credit for projects that start next year, to save an entire U.S. manufacturing sector and 37,000 jobs that we’ll otherwise lose by early 2013. Specifically we urge Congress to extend the wind tax credit for all projects that commence construction in 2013, as adopted by the Senate Finance Committee on Aug. 2, on a bipartisan 19-5 vote.”

The Production Tax Credit (PTC), a policy with long-standing bi-partisan support, has succeeded in incentivizing an average of $15.5 billion a year in private investment in U.S. wind farms over the past five years. It works by providing a tax credit of 2.2 cents a kilowatt-hour once the electricity is generated, for the first 10 years that a U.S. wind farm is in operation.

Led by Members of Congress who worked to help build a domestic wind industry, to the benefit of local economies and energy customers, the PTC has become an American manufacturing and innovation success story.

The result of AWEA’s analysis specifies that the tax credit would start at 100% of the current 2.2 cents a kilowatt-hour for projects started in 2013, and be phased down to 90% of that value for projects placed in service in 2014; 80% in 2015; 70% in 2016; and 60% in both 2017 and 2018, ending after that.

Bode said the analysis indicates that would allow wind energy to establish a stable base market in the U.S. that the industry can build on, with further market and technology innovation. The process of developing it started last spring, included detailed economic analyses and high-level discussions with industry leaders, and culminated in approval by the AWEA Board of Directors.

“We began this process in order to be a part of the solution on our nation’s fiscal challenges, while creating needed stability for wind industry development, both of which are concerns for our industry. We wanted to take this head-on, as part of our patriotic duty as well as our duty to the industry.” Bode said. “We completed the analysis, and this is what it identified as necessary for at least a minimally viable industry.”

The resulting proposal is described in a letter that AWEA is sending to leaders on Capitol Hill today. It is addressed to Sen. Max Baucus (D-MT), Chairman of the Senate Finance Committee; Sen. Orrin Hatch (R-UT), ranking Republican on that committee; Rep. Dave Camp (R-MI), Chairman of the House Ways and Means Committee; and Rep. Sander Levin (D-MI), ranking Democrat on that committee. Copied are House Speaker John Boehner (R-OH) and Minority Leader Nancy Pelosi D-CA); and Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY).

The letter says in part, “The wind industry recognizes that our country is facing significant fiscal challenges and is supportive of all energy technology incentives being reviewed and even phased down when Congress considers tax reform. However, the PTC has supported the wind industry in its efforts to significantly reduce the cost of producing electricity, and its continued availability for a reasonable period of time will allow the industry to invest in the cost-saving technologies required to finish the job.”

Bode said that the letter addresses separate parallel conversations that have been going on between the industry and Capitol Hill, about extending the PTC in the short term, and the vision for the long-term future of the PTC.

“With the policy certainty that accompanies a stable extension,” the letter says, “the industry believes it can achieve the greater economies of scale and technology improvements that it needs to become cost-competitive without the PTC.”

About the American Wind Energy Association
AWEA is the national trade association of America’s wind industry, with 2,000 member companies, including global leaders in wind power and energy development, wind turbine manufacturing, component and service suppliers, and the world’s largest wind power trade show, the WINDPOWER Conference & Exhibition, which takes place next in Chicago, May 5-8, 2013. AWEA is the voice of wind energy in the U.S., promoting renewable energy to power a cleaner, stronger America. Look up information on wind energy at the AWEA website. Find insight on industry issues at AWEA’s blog Into the Wind. Join AWEA on Facebook. Follow AWEA on Twitter.

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About the Author

is tryin' to help society help itself (and other species) with the power of the typed word. He spends most of his time here on CleanTechnica as its director and chief editor, but he's also the president of Important Media and the director/founder of EV Obsession, Solar Love, and Bikocity. Zach is recognized globally as a solar energy, electric car, and energy storage expert. Zach has long-term investments in TSLA, FSLR, SPWR, SEDG, & ABB — after years of covering solar and EVs, he simply has a lot of faith in these particular companies and feels like they are good cleantech companies to invest in.

  • Nick

    Wow. The AWEA actually took out its own gun and shot itself by proposed a completely useless and stupid phaseout plan that will be totally unsupportable by any politician – Dem or Repub – who isn’t living in a world of make-believe. Of all the ways I thought this would end, I sure didn’t think it would be by self-immolation. Well, bye bye wind industry.

    • Bob_Wallace

      How do you figure that to be true?

      Cutting the 2013 subsidies will cause a lot of job loss and
      even Republican governors are campaigning for continuing subsidies for a while.

      Now they can go to their Reps and Senators and argue that this is a short term program that can be written to disappear within five years. With savings starting in 2014. This is much different than asking for another three year extension at 100% of past level expenditure and the expectation of wind coming back for another three years.

      The AWEA has previously stated that the industry does not need long term help, just help for long enough for infrastructure to get into place and supply streams firmed.

      Giving up subsidies takes away a major weapon from the anti-wind group. And I’m willing to believe that the AWEA has done the math.

      Wind prices are decreasing and the cost of their single price competitor, natural gas, is heading higher.

      • Nick

        It needed to be a much sharper and shorter phaseout, given the fiscal cliff and $16 trillion in debt. The alternative if a 100% immediate shut off in 2013 will be more attractive. There is no need for wind energy right now (except for some perceived intangible benefit of ‘green energy’ which is elusive and debatable) given cheap gas for years on the horizon (where do you get that natural gas is heading higher? That is not the estimate for years to come) Either way, we’ll know the impact shortly.

        • Bob_Wallace

          Very likely the “fiscal cliff” will be history in a couple of weeks. Papers are being passed between the decision makers at this moment.

          The amount of money used to subsidize wind is a minuscule portion of the national debt. If you destroy the American wind industry by jerking back subsidies too rapidly you may well end up costing the government more in lost revenue and unemployment costs.

          We need a vibrant and growing wind industry. We’ve got to get ourselves off fossil fuels.

          Natural gas prices going up. Check the futures market.

          • Nick

            Denise Bode, head of AWEA, just resigned a few minutes ago. If you were ‘on top’ and felt assured of victory, wouldn’t you stay on a few more weeks to be hailed the conquoring hero? The end must be nigh… she wanted out before the crap storm hit the fan.

          • Bob_Wallace

            Well, how about we wait for some facts?

            Of course, it you want to gin up a conspiracy theory that’s up to you. But, please take it elsewhere.

          • Nick

            You’re a hoot. Facts? The resignation of the head of the lobby is the fact!

          • Bob_Wallace

            I gave you some facts yesterday Nick.

            Don’t trip over them and hurt yourself.

          • Bob_Wallace

            And a few facts enter from stage right…

            “In a Friday interview with The Hill, Bode said that she is “not going anywhere” until the credit extension “gets done.”

            Asked whether it would get extended, she said, “Oh yeah. Of course it will be.”

            AWEA floated a *phase-out plan* for
            the credit on Wednesday, ostensibly to secure support from Republicans who wonder when the industry plans to operate without the credit.

            Bode told The Hill last month that she felt getting the wind industry self-sufficient would cement her “legacy.” She said getting the credit extension was crucial to realizing that goal.

            “There is now a strong, bipartisan team of Congressional champions for the wind industry, and the all-important extension of the Production Tax Credit (PTC),” Bode said in a Friday statement. “When that is secured, all of my goals from the AWEA Board will have been accomplished.”

            Rob Gramlich, AWEA’s senior vice president for public policy, will serve as interim CEO.

            Bode said she felt she had fulfilled the four-year commitment she gave to AWEA. She said she accomplished what was asked of her, which was “getting AWEA a seat at the table.”

            She added that the timing was right to leave, as she wants to represent energy and other firms in possible tax reform discussions during the next Congress.

            “I really want to get back in the fray and be an advocate,” she said.”

  • Bob_Wallace

    Wonder how long we’ll have to wait for the fossil fuel and nuclear industries to propose phasing out their subsidies?

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