Congress might have given short-term support for the nation’s wind industry by passing a one-year extension of the Wind Energy Production Tax Credit, but the future of the $12 billion incentive program remains up in the air.
Tuesday night’s tax package, part of the fiscal cliff bill approved by Congress, included an extension of the nearly 21-year-old incentive program, affecting the wind energy industry and turbine lease holders across the South Plains.
With the tax credit, estimated to cost $12 billion, producers can claim a 2.2 cent per kilowatt hour tax credit for wind electricity produced for 10 years.
The tax credit also allows renewable energy facilities that begin construction before the end of 2013 to claim the credit.
Rep. Randy Neugebauer, R-Lubbock, said the one-year extension does little in terms of giving the wind energy industry an encouraging outlook for the future.
“Right now the industry assumes, at the end of the year, it’s going to be extended another year, and I’m not sure about that,” he said.
Neugebauer said he wants to see the tax credit phased out.
“We need to let the industry stand on its own,” he said.
The American Wind Energy Association announced the tax credit extension could save up to 37,000 jobs, has the potential to produce more and could revive business at nearly 500 manufacturing facilities.
“The extension of the wind energy (credits) for community and offshore projects will allow continued growth of the energy source that installed the most new electrical generating capacity in America last year, with factories or wind farms in all 50 states,” according to a statement released by the trade association Wednesday.
The one-year time frame for the tax credit allows companies that manufacture and install wind turbines the 18-24 months it takes to develop a new wind farm, according to the association.
Sweetwater Mayor Greg Wortham, executive director of the Texas Wind Energy Clearinghouse, said he was unimpressed by the one-year extension of the tax credit.
He estimated 40,000 wind energy jobs have been lost as companies have halted production, not put up turbines across the state and wait to see what Congress does with the tax credit.
“It will help recover some ready-to-go projects, but a one-year extension won’t give a lot of projects enough time to get started,” he said.
Wortham said the wind industry needs four, five or more years of production extensions to know far enough into the future what projects it can commit to.
The extension comes as the Texas wind energy industry continues expanding – illustrated by a recent wind energy production milestone in the state.
The high winds that sent a chill through Texas last week also contributed to a new wind power record, with wind generation providing 8,638 megawatts of power at 3:11 p.m. on Dec. 25, according to a statement released by the Electric Reliability Council of Texas.
This output represented nearly 26 percent of system load in ERCOT at the time. The new record is 117 MW higher than the previous 8,521 MW-record set Nov. 10.
“Unlike traditional power plants, wind power output can vary dramatically over the course of a single day, and even more so over time,” Kent Saathoff, ERCOT’s vice president of grid operations and system planning, said in a statement Wednesday. “With new tools and experience, our operators have learned how to harness every megawatt of power they can when the wind is blowing at high levels like this.”
More than 6,600 MW of the new record included wind power from West Texas wind farms, followed by more than 1,600 MW from wind farms along the Texas Coast. One MW is enough electricity to power about 200 homes during periods when electric use is highest and about 500 homes during periods of typical consumption.
Neugebauer voted against the fiscal cliff legislation, citing concerns it did not include significant spending cuts.
Such cuts, he said, could include eventually eliminating the wind energy credit, Social Security reform and trimming back food stamp spending.
“We’re going to look at every corner of the budget,” he said. “We’re going to learn to live within our means.”
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