United States wind power developers are installing a record numbers of turbines this year: The U.S. wind industry in August for the first time surpassed 50,000 megawatts (MW) of generation capacity. That’s enough to power 13 million homes, the American Wind Energy Association (AWEA) said in a report this week. Wind developers have added 4,728 MW of wind power so far in 2012 with another 8,430 MW under construction. But there’s a cloud on the horizon that wind power alone will be unable to blow away. That growth could weaken and stall if the tax credit incentive scheme for wind production tax credit were to expire and not be replaced at the end of the year. The fact that wind power tax credits have become a political football in the Obama versus Romney election debates.
The federal production tax credit for renewable energy is due to expire at the year-end. It has been in place continuously since 2005 and has helped create more than $15 billion a year in investment in U.S. wind farms. Denise Bode, CE of AWEA said:
“This is what a successful policy looks like when it’s working, but whether wind will continue to be a bright spot in the U.S. economy now depends on whether Congress acts to extend the production tax credit by the end of the year. It is up to Congress to bring it to a vote or else lose 37,000 jobs by the first quarter of next year.”
A proposal to extend the credit for projects that start construction next year won bipartisan support from the Senate Finance Committee on August 2, as part of an overall “tax extenders” package. The bill awaits action by the full Congress, expected in its first session after the November U.S. elections. But the mandate is now looking very wobbly. Mitt Romney advocated letting tax credit expire and not be replaced. This hostility was publically reinforce by attacking it as part of the “$90 billion in breaks” Obama has granted to solar and wind technologies. Of course Mr Romney has a convenient memory: Fossil fuel and nuclear subsidies dwarf anything provided for renewable energy. But you won’t hear him criticising his friends in the old-fuels camp.
If wind energy production tax credits were to cease, that would bend the tax system away from renewables and in favour of fossil fuels and nuclear energy, both of which have been enjoying subsidies for decades. Another attack comes from the “Americans for Prosperity” group which has sent letters to lawmakers in the US calling for “an energy policy that is based on market principles, not one that is based on extending handouts to politically connected industries, such as the wind” credit. All well and dandy- but Americans for Prosperity is funded by the conservative brothers Charles and David Koch, whose family fortune comes from oil refining. Ahhh.
Another sniper is Exelon, which has been campaigning against the credit for more than a year, published a consultant’s report last month in which it was suggested that the credit provides a profit for wind producers even if they sell their energy at a loss. The industry vehemently disputes that. Exelon’s business is over 90% nuclear.
Note: The US federal subsidy is known as the production tax credit, which is worth 2.2 cents per kilowatt-hour to wind-energy producers. That’s about a third of the cost of wind generation on average. Under current law it can be converted into a 30% investment tax credit or, for projects that were under construction by the end of last year, into a 30% cash grant. It is a vital boost for the wind power industry. Without it, the industry would rapidly lose the wind from its sails and the whole renewable ship might run aground.
