Congress Extends Tax Credit for Wind Power, But it Won't Help

By a 76-16 vote, the U.S. Senate last night extended the federal Production Tax Credit for wind power facilities until the end of 2015, but the extension is unlikely to serve as an incentive for new wind turbines.

The Production Tax Credit will provide wind turbine owners slightly more than two cents in tax credits for every kilowatt-hour of electrical power their qualifying turbines produce. That may not sound like much, but it adds up: a large 2.5 megawatt turbine would earn its owners more than $50 in tax credits for every hour it produces power at full capacity.

But there's a problem: the extended PTC is highly unlikely to serve as an incentive for new wind power construction. That's because in order to qualify for the tax credit through 2015, a wind facility has to begin construction by the end of 2014 -- two weeks from now.

The House of Representatives approved the PTC earlier in December, and the measure is expected to sail through the Oval Office.

Though the measure benefits wind power companies and their investors, some in the trade have criticized the short deadline and one-year term of the extension. The Senate Finance Committee had given its approval to a two-year extension earlier this year, and Wind Power Weekly reports that one of the "no" votes cast in the Senate, by Oregon Senator Ron Wyden, was an attempt to force a two-year extension.

The December 31, 2014 deadline for construction in order to qualify for the extended PTC means that the only non-ground-broken projects that could possibly qualify are already approved, funded, and in the pipeline to commence construction before New Year's anyway. In other words, the extended PTC isn't an incentive for new construction, but rather a subsidy of wind power facilities that either already exist or would soon even without the PTC.

The PTC as currently crafted provides about $10 billion to wind energy companies. The target of ultraconservative lobbying over the last few weeks, the measure nonetheless found support among Republicans in both houses of Congress largely due to the growing wind sector in red states.

Wind advocates were quick to point out that the PTC wasn't much of an incentive for new turbines. "It has very little value to the wind industry," Nancy Rader, executive director of the California Wind Energy Association, told the Desert Sun's Sammy Roth. "I know it's a disappointment."