Wind tax credit is extended a year
A one year extension of the U.S. tax credit for wind power, part of the budget compromise Congress passed Tuesday, will save as many as 37,000 jobs in an industry that is expected to stall this year, the American Wind Energy Association estimates.
The production tax credit was due to expire at the end of 2012. It will cover all wind projects that start construction in 2013.
The wind industry lobbied all through 2012 for an extension of the credit. With its fate uncertain, the U.S. installed an estimated 11,800 megawatts of turbines in 2012, including the largest wind farm ever built in Kansas. Called Flat Ridge 2, it is jointly owned by BP Wind Energy and Sempra U.S. Gas & Power and has 274 wind turbines in southern Kansas able to generate 438 megawatts, enough to supply electricity to 160,000 homes.
But plans nationwide call for installing only 4,800 megawatts this year, according to Bloomberg New Energy Finance. With the extension, development will probably pick up in the second half of the year but might not drive substantial growth until next year.
“Though too late for this year, it will allow the U.S. market to see some recovery in 2014,” said Justin Wu, the head of wind analysis at New Energy Finance.
Energy developers were racing to complete work by Dec. 31 to qualify for a tax credit of 2.2 cents a kilowatt-hour for power from wind farms that were completed by the deadline.
Flat Ridge 2, for example, began operation on New Year’s Eve, which allowed it to receive the production tax credit even if it had not been extended past 2012. But BP Wind had shelved plans for additional wind projects, including in Kansas, until the uncertainty over the incentive’s future was resolved.
The company on Wednesday said it was pleased with the “common-sense extension” of the production tax credit.
“This will allow wind energy developers to move forward with plans for new projects in 2013 while providing an opportunity to discuss ideas on the proper role of the PTC moving forward,” said Matt Hartwig, a spokesman for the company.
Nationally, manufacturers and installers of wind turbines had sought the revised language in Tuesday’s bill to allow for the 18 to 24 months needed to develop new wind farms, according to the Washington-based trade group.
The tax credit helped make wind the largest source of new generating capacity in the U.S. last year, according to New Energy Finance.
“Now we can continue to provide America with more clean, affordable, homegrown energy and keep growing a new manufacturing sector that’s now making nearly 70 percent of our wind turbines in the U.S.,” said Rob Gramlich, who just became interim chief executive of American Wind Energy Association.
Wind energy has the potential to supply as much as 20 percent of America’s electricity by 2030, according to projections from the U.S. Energy Department.