| Energy Bill Extends Wind
Power Incentive Through 2007
The American Wind Energy Association (AWEA) hailed last week the
extension of the wind energy Production Tax Credit (PTC) included in the
recently signed energy bill. The PTC, which was scheduled to expire on
December 31, 2005, provides a 1.9 cent-per-kilowatt-hour (kWh) tax
credit for electricity generated with wind turbines over the first 10
years of a project’s operations and is a critical factor in financing
new wind farms. “This is the first time that an extension of the production tax credit for wind energy has been approved before the credit expires, and, following the past six years of boom-and-bust cycles caused by successive expirations, that is very good news for the industry,” said Randall Swisher, executive director, AWEA. “The timely extension of the credit allows companies to plan for growth, create jobs, and provide more clean power to customers nationwide.” Up to 2,500 megawatts of wind energy capacity are scheduled to come on line in the U.S. this year, bringing new power to the equivalent of 700,000 homes and injecting over $3 billion of investment into the power generation sector. With the timely extension of the PTC, the American Wind Energy Association anticipates that strong growth momentum will continue in 2006 and 2007. By changing the PTC expiration date to December 31, 2007, the extension leaves in place the PTC’s current 1.9 cent per kilowatt-hour value, the annual inflation adjustment provision and the 10-year term to generate credits following the installation of a wind turbine. The bill does not contain restrictions on the availability of the PTC or place limits on offshore wind projects. The final energy bill does not include the Senate provision calling for 10 percent of the nation’s electricity to be generated from renewable sources like wind and solar by 2020, also referred to as the Renewables Portfolio Standard (RPS). “By failing to include in the energy bill this provision to boost renewable energy development over the longer term, Congress missed a unique opportunity to enact forward-looking energy, economic, security, and environmental policy all at once,” said Swisher. The bill also does not include an incentive for small wind systems for homeowners and small businesses, although it provides a 30 percent credit capped at $2,000 for residential solar systems and fuel cells. Such incentives are needed to help reduce the up-front cost of purchasing such systems.
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