KEYSER, W.Va. – The scheduled expiration of programs that provide production tax credits or cash grants as financial incentives to renewable energy projects has led to a debate in Washington, according to Susan Olavarria, director of communications and government affairs for Edison Mission Energy.
“The scheduled expiration of these programs has touched off a vigorous debate in Washington about the potential chilling impact on future development of wind energy if they are not renewed,” said Olavarria.
The 1603 program expired on Dec. 31, although pro-jects that started construction prior to that date are eligible to receive the award. As of mid-2012, the 1603 program continues to stimulate project development, according to the National Renewable Energy Laboratory.
Pinnacle Wind Farm at NewPage, located on Green Mountain, broke ground in February 2011 and was commissioned during January 2012.
The U.S. Department of the Treasury has announced a payment of $44.1 million through its 1603 program to Pinnacle Wind Farm LLC, a subsidiary of Edison Mission Energy.
“Virtually every wind farm in the U.S. benefits from government financial incentives in the form of production tax credits or 1603 Treasury cash grants,” said Olavarria. “Developers currently have the option to utilize one or the other of these financial incentives, and there are various criteria that must be met and various internal analyses that individual companies like ours conduct on a pro-ject-by-project basis to maximize value of the incentives.”
The 1603 American Recovery and Reinvestment Tax Act program, which is administered by the Department of the Treasury in conjunction with the Department of Energy, offers renewable energy project developers cash payments in lieu of the investment tax credits, according to the Treasury’s website.
“Pinnacle is not the first project where we elected to apply for an immediate, up-front cash grant – which is equal to 30 percent of the eligible capital costs of a project —instead of production tax credits that are monetized over several years,” said Olavarria.
In order to receive the cash grant, Edison Mission Energy had to satisfy the Treasury’s criteria, according to Olavarria.
“Wind energy in this country has seen explosive growth in recent years – and Edison Mission Energy has become the sixth-largest operator of wind energy with 31 projects in 11 states – largely because of federal, state and local financial incentives,” said Olavarria. “These incentives have created jobs, attracted capital investment and diversified our nation’s energy supply by adding renewable sources.”
In 2001, Criterion Power Partners LLC and Roth Rock Wind Farm LLC were awarded grants of $39.1 million for the Criterion Wind project and $31.7 million for the Roth Rock Wind project, both of which are located on Backbone Mountain in Garrett County.
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