Wind energy construction mired in doubt over credit

Source: Written by CHRISTOPHER DOERING, Gannett Washington Bureau • Posted: Friday, January 31, 2014

Wind energy construction in the United States is at an all-time high, but the industry warned Thursday that the start of new projects this year is uncertain as Congress considers whether to extend a two-decade-old tax credit that has expired.

The American Wind Industry Association said more than 12,000 megawatts of wind power generation, a record, was under construction at the end of 2013, including 1,050 megawatts in Iowa.

In the Hawkeye State, 16 projects are under construction. Most are small projects, with the exception of four by Mid­American Energy Co., which announced last May it would boost wind generation, consisting of up to 656 new turbines, by the end of 2015. Iowa generates 25 percent of its electricity by wind power, the highest percentage in the United States.

Tom Kiernan, chief executive with the American Wind Energy Association, told reporters that the industry has been mired in a “boom-to-bust cycle” during the last few years as Congress has considered what to do with a wind tax credit in place since 1992, and has extended nine times since then.

The wind tax credit lapsed at the end of 2012 before being renewed early last year. It expired again at the end of 2013, but many in the wind industry expect it to be renewed later this year.

Still, the uncertainty early in 2013 yielded a sharp slowdown in wind projects before things increased dramatically in the fourth quarter of the year. An estimated 11,000 megawatts of construction activity started during the last three months of 2013, constituting about 91 percent of the total currently underway.

Wind producers are bracing for a similar pattern in 2014 because of the failure to renew the tax credit.

“The highest priority in 2014” is to get the credit extended, Kiernan said. “We have to get it extended so we can avoid the boom-bust cycle. If we have a stable tax policy environment, the wind industry can thrive.”

Wind construction projects typically start in the spring, so the longer it takes Congress to renew the production tax credit, the larger the impact will be on the industry, officials with the American Wind Industry Association said.

Delays make it hard to retain workers, many of whom leave permanently if they are furloughed, while affecting industries that benefit from wind, such as steel made to build the turbines.

The recent credit provided a 2.3-cent-per-kilowatt-hour benefit for electricity generated from utility-scale turbines during the first 10 years of a facility’s operation. Renewable energy projects that started construction before Dec. 31 were eligible for the tax credit.

The wind provision is one of about 50 tax credits that expired Dec. 31. U.S. Sen. Chuck Grassley, R-Ia., said last month that the tax credits, which usually are dealt with together, failed to get a vote in Congress in 2013 because key lawmakers thought they could include them as part of a major tax reform bill.