Jan. 3 (Bloomberg) — The one-year extension of a U.S. tax
credit for wind energy revises the policy in ways that may
revive an industry that’s expected to slump 59 percent this
year.
The production tax credit was due to expire Dec. 31 and the
extension was part of the Jan. 1 legislation averting the so-
called fiscal cliff that would have raised income taxes for most
U.S. workers.
Unlike the prior policy, Congress will now allow the credit
to cover wind farms that begin construction in 2013, not just
those that go into operation. Uncertainty last year over whether
it would be renewed is a key reason the U.S. is expected to
install 4,800 megawatts of turbines this year, down from an
estimated 11,800 megawatts in 2012, Bloomberg New Energy Finance
said in a November report.
“This extension allows the industry to reactivate
development that had been on hold since mid-year,” Tom Vinson,
senior director of federal and regulatory affairs at the
American Wind Energy Association, said yesterday in an
interview. “The start-construction language provides a longer
period of certainty than prior extensions.”
Delayed Recovery
The full benefits of the extension may not be felt this
year, Justin Wu, Hong Kong-based head of wind analysis at New
Energy Finance, said by e-mail. “Though too late for this year,
it will allow the U.S. market to see some recovery in 2014.”
Spain’s Iberdrola SA, the second-largest developer of U.S.
wind farms with more than 4,800 megawatts in operation, would
have pursued few new wind developments this year without the
revised language. Manufacturers and installers of wind turbines
had sought the change to allow for the 18 months to 24 months
needed to develop new wind farms.
“That was pretty critical to resuming development,” Paul
Copleman, an Iberdrola spokesman, said yesterday in an
interview. “Without that, the extension might not have had any
impact this year. We’re in a good position to get some
construction started.”
Energy developers were racing to complete work by Dec. 31
to qualify for the tax credit of 2.2 cents a kilowatt-hour for
power from wind farms.
“The down-to-the-wire nature of this extension meant that
many developers, rushing to finish their projects before the
2012 year-end deadline, probably had to work through the
holidays,” Wu said.
The tax credit helped make wind the largest source of new
capacity in the U.S. last year, according to New Energy Finance.
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. AWEA, based in
Washington, estimates that extending the tax credit will save as
many as 37,000 jobs, according to a Jan. 1 statement.
To contact the reporters on this story:
Iain Wilson in Sydney at
iwilson2@bloomberg.net;
Christopher Martin in New York at
cmartin11@bloomberg.net
To contact the editor responsible for this story:
Will Wade at
wwade4@bloomberg.net
