Tax Credit Stalls Wind Energy Push in Illinois

Tax Credit Stalls Wind Energy Push in Illinois

Sep 13 - Daily Herald; Arlington Heights, Ill.

The future of wind energy is as uncertain as the weather.

As long as a proposed revival of the federal wind energy production tax credit, which expired Dec. 31, 2003, remains stalled in Congress, there will be little or no growth in installed wind generating capacity, says the American Wind Energy Association.

In Illinois, one wind farm commenced operations last year, but five others are on hold awaiting the tax credit.

Without it, the advocates say, wind power isn't competitive.

In 2001 it enacted the Illinois Resource and Energy Security Act set a statewide renewable energy goal of 5 percent of total energy by 2010 and at least 15 percent by 2020. But the legislation does not include an implementation schedule, compliance verification or credit trading provisions.

The tax credit was part of the many-faceted energy bill that failed last year. Now it's a part of a corporate tax bill. The bill passed both the House and Senate but is stalled in a conference committee.

Nationally, roughly $2 billion has been invested in new projects, and this money is now yielding no return and burdening the investors, said Christine Real de Azua, spokeswoman for the American Wind Energy Association.

She says the companies are hesitant to continue any work on stalled projects until they can include the tax credits in their budgets.

There is one wind farm nearly complete in Crescent Ridge, southwest of Chicago in Bureau County, by Illinois Wind Energy LLC, one under construction in Manlius, Ill., and three more proposed elsewhere in the state, according to AWEA.

The only operating wind farm, Mendota Hills, in Lee County, west of Chicago, is owned by Minneapolis-based Navitas Energy Inc., a subsidiary of Spain-based Gamesa Energia SA.

The 50.4-megawatt farm spreads over roughly 3,000 acres. Its output is sold to ComEd in a short-term purchasing agreement. The land owners receive $2,000 to $4,000 a year for each turbine.

The wind farm started production in November 2003, before the last tax credit expired. Under the rules, once a wind farm begins production, it receives the tax credit for the next 10 years.

"The Mendota Hills project already qualifies, so no worries there," said Christopher Moore, director of development at Navitas Energy.

ComEd is required to buy wind energy under federal law at the cost it would have to pay if it generated the power itself.

The main obstacle in the United States to development of more wind farms is the short-lived windows Congress gives when it approves production tax credits, or PTCs, according to Moore.

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