Wind Production Tax Credit Extended in Fiscal Cliff Deal

At least part of the fiscal cliff deal, which people will no doubt be debating for weeks to come, was a boon to sustainable business—the extension of the wind power production tax credit (PTC).

The credit, which was included in a “tax extenders” package, will apply to all wind projects that begin construction in 2013. This is a departure from the original language which only targeted projects that began operation during the year in question. This effectively broadens the scope of the credit due to the long lead time involved in developing a wind farm.

The 2.2 cent per kWh credit will be applied for ten years of production for any project that qualifies within the one year extension window. The credit is expected to cost $12.1 billion over the next ten years.

There are presently about 75,000 people employed in the wind industry, which has factories or wind farms in all 50 states. The measure is expected to save some 37,000 jobs from the budget axe. In a post last summer, I spoke of a 91,000-job swing hanging on the outcome of the PTC renewal. That encompassed the 37,000 jobs expected to be lost, plus an additional 54,000 jobs expected to be added if the credit was extended for four years.

Since last night’s deal only extended the credit for one-year, there won’t be that many additional jobs created, though it’s not unreasonable to expect some gains.

Last year saw a record 44 percent of newly installed electric generation capacity take the form of wind turbines which substantially outpaced natural gas at 30 percent.

The wind industry, which involves some 500 manufacturers in the US, has become a force to be reckoned with in Washington. Many of the 2,000 companies that belong to the American Wind Energy Association (AWEA) sent delegations to the capital in the closing days of 2012, delivering hundreds of thousands of letters from constituents.

Given the lobbying clout of big oil and coal, it clearly takes fire to fight fire in today’s energy business. This is something outgoing AWEA CEO Denise Bode, a former lobbyist for the Independent Petroleum Association of America, knows all too well. Bode beefed up the AWEA staff after coming on-board, a move that appears to have paid off nicely.

Said Bode, upon hearing the news, "On behalf of all the people working in wind energy manufacturing facilities, their families, and all the communities that benefit, we thank President Obama and all the Members of the House and Senate who had the foresight to extend this successful policy, so wind projects can continue to be developed in 2013 and 2014.”

Colorado Senator Mark Udall had also lobbied hard for the extension, giving some 27 speeches in the senate on the subject. Udall clearly recognized the importance of wind power to Colorado’s economy. “Thanks to the PTC extension, I am confident the wind industry will be able to create jobs and help revitalize our American manufacturing sector,” Udall said.

Some, like Pete Maysmith, the Executive Director of Colorado Conservation Voters, felt that the one-year extension was insufficient.

“Without that extension, you were really going to see the wind industry grind to a halt or at least wind way down. And that’s not okay, because it’s a clean, non-polluting source of energy we need to power America. But we believe it should be more than one year. We can’t stop worrying about the PTC today, but we got a reprieve. Coloradans who are employed in the industry and who care about a clean energy future got a reprieve.”

Because of the last minute nature of the deal, as compared to the long term nature of wind power projects, there will have been some lost opportunities.

A statement from wind turbine manufacturer Vestas said, “Unfortunately, the late timing of the extension will result in a significant reduction in 2013 installations from previous years due to the time it takes from when an order is placed to project completion, the U.S. market will nonetheless be stronger as a result of the PTC extension.”

Also included in the fiscal cliff deal is a two-year extension for a 20% credit for advanced biofuels research. This extension is estimated to cost $14.3 billion. Energy-efficiency incentives for new and existing homes were also included in the bill.

[Image credit: Lsbentz: Flickr Creative Commons]

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RP Siegel, PE, is an inventor, consultant and author. He co-wrote the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water in an exciting and entertaining format. Now available on Kindle.

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