The renewable energy industry may not be as united in its push to extend an expiring incentive as recent lobbying efforts would indicate.
The solar energy industry and its main trade group, the Solar Energy Industries Association, have led the charge in recent weeks to convince Congress to extend a renewable energy grant program that was originally created in the 2009 stimulus law and extended for one year last December.
A handful of other industry trade groups – like the National Electrical Contractors Association, Biomass Power Association and Fuel Cell and Hydrogen Energy Association – have joined the push to extend the so-called Section 1603 Treasury Grant Program, which is currently set to expire on Dec. 31.
But noticeably absent from the effort is the wind industry.
“The 1603 program has been a real benefit to the wind industry and certainly has helped spur additional growth, but extending 1603 doesn’t get us past the end of 2012,” Martha Wyrsch, president of Vestas-American Wind Technology, told senators yesterday during a Finance Committee subcommittee hearing on renewable energy tax credits.
Instead, the wind industry is focusing its efforts on securing an extension of a lucrative production tax credit that grants companies that produce electricity from wind, solar, geothermal and certain plants a hefty 2.2-cent-per-kilowatt-hour subsidy for the first 10 years of the facility’s operation. That credit is set to expire at the end of 2012.
“It’s a critical time for Congress to extend the production tax credit,” American Wind Energy Association CEO Denise Bode said earlier this week (Greenwire, Dec. 12).
The industry is backing a bipartisan House bill (H.R. 3307) from Reps. Earl Blumenauer (D-Ore.) and Dave Reichert (R-Wash.) that would continue the production tax credit through 2016.
“So a longer-term extension of the production tax credit would be a better way to go than a short-term extension of 1603? Is that what I’m hearing?” Sen. Jeff Bingaman (D-N.M.), chairman of the Finance Committee’s Energy, Natural Resources, and Infrastructure subpanel, asked during yesterday’s hearing.
“Yes, senator. It would be really critical to us because the production tax credit focuses on generation of electricity, and the tax credit is used as new electricity is generated from those wind farms,” Wyrsch said. “A longer-term extension is required for these long-term planning horizons.”
It is not that the wind industry hasn’t benefitted from the 1603 program. Indeed, it helped the industry grow by more than 40 percent in each of the first two years that the incentive was offered.
But the wind industry operates on a three-year project timeline, Wyrsch said, and a short, one-year extension of the benefit would not do much good
“An order of turbines is about a 12-month horizon, so a customer will come to us about this time of year and will say ‘For 2013, we need these turbines for new power plants that we’re building.’ With the extension of 1603, say, to another year, we would simply be finishing out projects that are currently on the books and already being planned,” Wyrsch said.
“In other words, what we would like and need is a program that takes us beyond that 2012 deadline and moves projects along,” she added.
Bode put it a different way earlier this week. “We’re not asking to have permanent support forever. We’re just asking to finish the job,” she said
But as lawmakers grapple with partisan gridlock, budget woes and concerns over the deficit, a lengthy extension of pricey subsidies could be a tough sell. Sen. John Cornyn (R-Texas), the subcommittee’s ranking member, addressed that issue during yesterday’s hearing.
“The theme in common with the testimony here is that whatever Congress does, it shouldn’t be done in fits and starts but on some basis that would allow for planning and predictability. I wholeheartedly agree,” Cornyn said.
“But the other challenge that hasn’t been directly alluded to is really the need for a national energy policy that takes into account all sources of energy, and what the best use of scarce tax dollars would be to encourage innovation, and to figure out once that innovation has occurred – once industry is sufficiently mature – that it doesn’t need any more tax subsidy and can operate on the good old capitalist system of risk and reward,” he added.
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