Wind Energy Production Tax Credit To Die Quietly December 31

Source: by Chris Clarke, KCET • Posted: Thursday, December 12, 2013

This time last year, the big renewable energy issue was the Federal Wind Power Production Tax Credit (PTC), which was set to expire at the end of 2012. The subsidy, which provides owners of wind turbines with 2.2 cents in tex credits for every kilowatt-hour the turbines produce, was called critical to the survival of the American wind industry. Wind advocates said that letting the PTC expire could kill the wind industry in the U.S., taking thousands of jobs and non-carbon electrical power with it.

At the last possible minute on January 1 Congress extended the PTC for a year. That year is about to end: the PTC expires in three weeks.

And yet the voices that clamored for PTC extension a year ago are largely silent this time around. There are predictable calls to extend the credit from wind energy industry groups, but nothing like the doomsday-tinged clamor we saw this time in 2012. Why the lack of fervor?

Under the terms of the PTC before it was extended, wind turbines that were producing power by December 31, 2012 got the subsidy, while those that came online afterward didn’t. Uncertainty over whether the credit would be extended caused a rush to complete projects in late 2012. It also prompted wind companies to hold off on plans for new turbines in early 2013, as they weren’t sure how profitable new turbines would be without the federal subsidy.

In December 2012, extension of the PTC was tied up in Congressional deadlock over the “fiscal cliff.” (Remember the fiscal cliff? Back before the sequester, which was itself before the government shutdown?) Some on the Republican side of Congress tried to make the credit a political topic similar to the failed solar company Solyndra, but that didn’t work as well as hoped: a number of midwestern “red states” have lucrative wind sectors. Representatives and Senators from places like Iowa and Texas, knowing which way the wind blew in their states, were loath to target the PTC for extinction.

Eventually, the PTC was rewritten and extended. That rewrite is important: instead of needing to deliver power, wind facilities need merely break ground on new projects by the end of 2013.

That’s likely blunted some of the desperation we saw last year in lobbying to extend the PTC.

Even with the last-minute extension in January, 2013 has been a tough year for wind in the U.S. It took much of the year for companies to regroup. According to a letter to Congressional leadership from 11 governors of states with large wind infrastructure, just one turbine was installed in the U.S. in the first two quarters of 2013.

That letter, sent in early November, calls for a multi-year extension of the PTC. The American Wind Energy Association (AWEA) put out a press release linked to that letter the day after

AWEA, the largest wind trade group in the U.S., is on record as supporting an extension. But the group hasn’t been beating the bushes for press the way it did last year. In a November interview with Politico, AWEA’s CEO Tom Kiernan used strikingly mixed language in discussing the PTC’s looming demise.

“If the PTC is not extended this year, that’s a concern because we need to have it extended as soon as possible,” said Kiernan. “We’re not going to fall off the cliff as rapidly as we did this year, but if the credit isn’t extended it will still have a similar effect.”

It probably doesn’t help that people like the Koch Brothers and the nuclear company Exelon have been pushing hard to end the PTC. In September, 23 conservative groups signed on to a letter by the Koch-backed Americans for Prosperity urging Congress to let the PTC expire this year, calling the credit a “misguided handout.”

That opposition apparently scuttled a bill introduced by Pennsylvania Representative Mike Fitzpatrick, HR 2987, which would have extended the PTC for six years and barred any further extensions. The bill’s intent was to provide a compromise between wind partisans, who pointed to regulatory uncertainty as stifling their industry’s development, and anti-subsidy activists, who’d get certainty that the PTC would end at some point. The so-called “PTC Certainty and Phaseout Act of 2013” was referred to the House Ways and Means Committee in August, and never made it out again.

So barring a legislative hat-trick, the PTC would seem to be dead as of January 1. The result, in California at least. may well be to tip the scales even further in solar’s favor in 2014.