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Experts say federal tax incentives drive turbine development  

When a group of passionate windmill opponents took their message before Somerset County commissioners, Commissioner Brad Cober said the county can do little to stop turbine development.

But he had this bit of advice for wind-power opponents: Urge elected officials to stop federal tax credits for wind power.

“The conversations we have had with developers indicate that it’s not profitable to build without the tax credit,” Cober said.

That incentive was renewed last week as President Bush signed a measure extending the federal production tax credit for wind and renewable energy ““ a move so important to the wind-power industry that some say turbine development would cease without it.

“It’s all about subsidies,” said Dan Boone, a Maryland-based wind energy policy analyst. “It doesn’t make economic sense for wind companies to develop without them. Essentially, the taxpayers are footing the bill.”

The bill became law Wednesday, about a year before the credits were set to expire.

500 in the air

The move provides additional momentum for developers with plans churning for the installation of 500 or more wind turbines in Cambria and Somerset counties during the next few years.

The savings can add up to about one-third of the initial investment costs for wind-power companies.

Because developers don’t have to buy wind and pay just $2,000 to $3,000 annually per turbine to lease land, up-front costs represent the bulk of investment in a wind plant.

Here’s how the numbers break down:

n The credits provide a 1.9-cent-per-kilowatt-hour tax credit for electricity generated during the first 10 years of a project’s operation.

n A 2-megawatt turbine ““ an average-sized turbine that costs about $3 million to buy and erect ““ running at 30 percent capacity would produce 5.25 million kilowatt hours per year.

n That works out to a tax credit of about $100,000 per year for one turbine. In 10 years, one turbine will have generated $1 million ““ one-third of the initial investment ““ in tax credits.

Representatives for wind energy call the credit vital. A market slowdown can occur as early as eight months before the credit expires, according to the American Wind Energy Association.

“This action by Congress comes at the right moment: The timely extension provides the stability that companies need to plan for growth and meet the nation’s fast-increasing demand for renewable energy,” association Executive Director Randall Swisher said in a release.

As the credit program periodically comes up for renewal, uncertainty about its future can affect every level of a proposed wind project, said Christine Real de Azua, association assistant director of communications.

“If you don’t know whether that credit will be there, there’s a big question mark in any stage of a wind-development project,” Azua said, adding that other energy sources are subsidized as well.

Tops pecking order

But others argue that renewable energy gets the biggest breaks.

With accelerated depreciation, wind companies can write off capital costs in five years.

For other types of energy companies, similar write-offs take 20 or 25 years.

Using the Environmental Investigation Agency figures, an article published by the Property and Environment Research Center calculates that renewable sources receive twice as much subsidies as the second-highest receiver, nuclear energy.

Following those two are natural gas, petroleum and coal.

The Bozeman, Mont., center calls itself the nation’s oldest and largest institution studying how market principles apply to environmental concerns.

In addition to federal incentives, wind companies get a boost from many states.

In Pennsylvania, a newly passed tax law mandates that turbines can be taxed only for the value of the land on which they are placed.

Senate Bill 514 allows power plants and the land they use to be subject to property taxes.

But nearly all of the value of a turbine is considered tax-exempt business equipment.

Somerset County’s method of turbine taxation mirrors the state law ““ taxing only the value of the land lease, which breaks down to a little more than $1,200 annually per turbine for those in Meyersdale. That sum is divided among the local school district, host township and the county. For the windmills in Garrett, that figure is closer to about $700 per turbine.

Even more wind-friendly, the Keystone State has no commission or permit process designated for wind farms.

Nearly all of the regulating power falls to individual townships, where supervisors often have no prior experience in dealing with the multimillion-dollar wind-energy industry.

But, Azua says, all the economic and regulatory incentives, such as renewable energy portfolios, lend a helping hand to an industry struggling to compete with more established but less environmentally conscious energy sources.

“We look at it as an investment. The return is good from a public policy point of view,” she added.

But others argue that the federal and state governments are pushing wind energy irresponsibly.

“I’m for renewable energy ““ but for responsible development,” said Michael Gannon, a Penn State biology professor who speaks on the possible detrimental effects on the environment of building wind plants on ridges.

“(Wind companies) would actually lose money without the subsidies,” Gannon said.

“The public is being led to believe that these are profitable and effective.”

The industry’s expansion in 2006 makes it the second-largest source of new power generation for two years in a row, behind natural gas-fired plants, according to the American Wind Energy Association.

Energy

Proponents say the energy that industrial strength windmills create can help to offset the use of emissions-emitting energy sources such as the burning of fossil fuels. Windmills do not generate air or water emissions and do not produce hazardous waste.

Opponents say windmills don’t produce enough energy ““ a 33 percent productivity rate is a high average ““ and they produce less energy during the summer, when use rises.

Noise

Industry groups say that a turning turbine registers near 50 decibels, similar to a kitchen refrigerator and less noisy than a typical office.

Opponents say the constant industrial noise can cause health problems. One physician, who studied at Johns Hopkins University School of Medicine, Princeton and Yale, is examining wind turbine syndrome, which she contends can cause sleep problems, headaches, dizziness, exhaustion, anxiety, concentration problems and ringing in the ears for people who are around them on a regular basis.

Environment

Opponents say that erecting turbines on ridgetops ““ where the wind is best ““ will destroy natural habitats and harm watersheds. The Allegheny Front, a ridge through Cambria and Somerset counties where developers plan to erect hundreds of turbines, is the eastern continental divide.

Proponents say that problems such as erosion can be prevented through proper installation and landscaping. Standard practices used by ski areas on similar terrain adequately deal with erosion that would be imposed by a wind farm and service roads, they say.

Wildlife

Opponents say wind farms on ridges kill a significant number of bats and birds, although there have been few significant studies. One study by the Bats and Wind Energy Cooperative found that as many as 2,600 bats were killed by turbines in Meyersdale and West Virginia during a six-week survey. Opponents also point out that the region’s ridges are vital travel lanes for migrating bird species.

Proponents say that, although turbines kill birds and bats, they don’t do so in significant numbers. They compare the deaths to those caused by other tall structures, such as buildings, and by natural predators, including house cats.

By Kecia Bal
The Tribune-Democrat

tribune-democrat.com

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

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