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U.S. Wind Market Federal Incentives  

Author:  | Economics

January 2011 —

Renewable Energy Production Tax Credit (PTC)
Expiration:  31 December 2012

  • Historically the backbone of US federal support for the wind industry, the PTC provides a production-based tax credit to the owner of a wind project
  • Currently equal to 2.2 cents/kWh and indexed annually for inflation

US Tax Code Section 48, Investment Tax Credit (ITC)
ARRA expanded the Section 48 ITC to be eligible for wind projects
Expiration:  Projects must commence construction by 31 December 2010 and be in-service by 31 December 2012

  • Provides owners of wind projects with the option to claim the ITC up-front for 30% of a wind project’s capital cost in lieu of claiming the PTC
  • ITC option contains multiple rules and limitations unique from the PTC in terms of how and by whom the incentive can be monetized

Department of the Treasury, Extended Cash Grant Option, Bill 1603
Expiration:  Projects must commence construction by 31 December 2011. Placed in service by January 1st 2013

  • Special federal incentive created by ARRA stimulus bill to help alleviate US wind industry reliance on third-party tax equity
  • Allows wind project owners to claim an up-front direct cash payment from the Treasury Department equal to the value of the 30% ITC option
  • As with the ITC, Treasury cash grants will be subject to recapture if the eligible wind project is sold within the first five years of operation

This article is the work of the author(s) indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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