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Uncertainty over tax credit worries wind energy producers

Investors in wind-powered electricity are paying close attention to deliberations in Washington over a soon-to-expire tax credit.

Congress is debating whether to renew the break beyond this year, allowing producers of wind power to keep collecting a two-cent credit for every kilowatt hour of electricity they harness.

It’s a big deal to developers like Brent Olson, who is helping build a wind farm in Big Stone County along Minnesota’s western border. Its 10 turbines are expected to supply enough electricity for about 5,000 homes. The project, he said, has drawn investments from 100 local residents and there is a lot of money at stake.

“They put in five grand apiece, up front,” Olson said. “With a potential, depending upon how the deal is structured, of having to come up with another $15,000 each.”

Olson said the credit is vital to the $30 million wind farm’s financial package, and the group is counting on Congress to renew it sometime this year.

“That’s the basic assumption, but dumb things happen. Dumb things come out of Washington sometimes,” Olson said.

If the credit lapses, it wouldn’t be the first time. Congress has let it run out three times in the last decade.

When it blinked off after 2003, the industry said construction of new wind farms dropped by 75 percent the next year.

Wind consultant David Norgaard said the almost yearly debate over the tax credit has slowed the nation’s development of wind energy and has been a source of frustration among planners and builders.

“It’s a tremendous amount of work that has to be put together and it takes years,” Norgaard said. “So for them to start and stop the production tax credit, it does absolutely no one any good that I can imagine.”

Xcel Energy Inc., one of the nation’s largest buyers of wind power, is worried, too. Mark Stoering, Xcel vice president for portfolio strategy and business development, said the lack of a credit could hurt the supply chain if manufacturers pull back.

“That supply chain bottleneck can only be exasperated, which doesn’t help any of us in the wind development business,” he said.

The Associated Press

Winona Daily News

11 January 2008