Expert Advice on Green Buildings

Wind Energy Tax Credits Extended in Fiscal Cliff Deal

 

Many Americans breathed a sigh of relief as Congress passed the fiscal cliff deal on January 1, 2013, which prevented large increases in income taxes. Among these relieved Americans were members of the wind industry, whose business was essentially saved by the extension of the wind energy tax credit. The Production Tax Credit on wind was originally set to end on December 31, 2012, but was extended through 2013 in Tuesday's fiscal deal.

The Renewable Energy Production Tax Credit (PTC) awards 2.2 cents per kilowatt hour for wind, geothermal and closed-loop biomass and 1.1 cents per kilowatt hour for other renewable energy technologies. This lasts for 10 years for most technologies, including wind. Alternatively, companies can request a lump-sum payment of 30% of the wind construction cost, according to the New York Times.

Since the deadline was originally set for December 31, 2012, a huge influx of wind installations occurred in 2012. In fact, on August 7, 2012, the American Wind Energy Association (AWEA) announced that wind power in the United States has reached a significant milestone: 50 gigawatts of electric generating capacity. This means that as of August, the U.S. wind energy powered the equivalent of 13 million homes and had the same capacity as 44 coal-fired power plants.

Wind energy construction roared up until December 31st, when companies were rushing to commission their turbines before the deadline.

However, layoffs began largely in the second half of 2012 as wind energy installers anticipated the expiration of the PTC, and as orders for 2013 came to a halt. AWEA had predicted that the industry, which employed about 75,000 in 2012, would lose about 37,000 jobs in the first quarter 2013 if the tax credit wasn't renewed.

The U.S. industry's dependence on the tax credit has created this boom-bust cycle, which ebbs and flows with the PTC's deadlines. Business will most likely boom again in 2013, until the tax credit's deadline again faces impending peril in 2014.

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