Congress revived a key tax credit for wind energy Tuesday – but only for two weeks.
Wind advocates had urged legislators to pass a multi-year extension of the tax credit, which expired at the end of last year. Under the bill passed overwhelmingly by the Senate late Tuesday, only projects that started construction this year – or that start construction before Dec. 31 – will be eligible for the tax credit.
For the wind industry, that’s a minor victory at best. According to the American Wind Energy Association, new wind construction all but evaporated this year due to uncertainty over whether the tax credit would be extended, meaning few projects stand to benefit from the retroactive extension.
“It has very little value to the wind industry,” said Nancy Rader, executive director of the California Wind Energy Association, an industry trade group. “I know it’s a disappointment.”
Tax credit supporters have argued that extending past 2014 would spark new wind development around the San Gorgonio Pass, where hundreds of old turbines are due to be replaced by newer, more efficient models. That kind of “repowering” could reduce the number of turbines in the Coachella Valley while increasing the area’s overall energy output, renewable energy experts say.
The production tax credit for wind and other renewables has been around since 1992, but it’s faced several renewal battles, and it’s lapsed on multiple occasions. Developers who qualify for the tax credit earn 2.3 cents per kilowatt-hour of energy produced over the first 10 years of a project’s lifespan.
“It’s a production tax credit – you get paid not based on how much the systems cost, but how much energy is produced,” said V. John White, executive director of the Center for Energy Efficiency and Renewable Technology, last month. “And this has been a very successful, performance-based standard that has really contributed to the industry’s growth.”
The production tax credit faced stiff opposition from groups backed by the fossil fuel industry, but it ultimately passed as part of a package that extended dozens of lapsed tax credits through the end of this year. The bill is expected to cost taxpayers $41.6 billion over 10 years, with the production tax credit – which applies to wind energy and several other renewables, although not solar – account for $6.4 billion.
Senate Majority Leader Harry Reid, D-Nev., nearly struck a deal with House Republicans last month that would have revived the production tax credit through 2017. But that deal fell apart after the White House threatened to veto it, arguing the overall package contained too many giveaways for big corporations.
The House, which adjourned for the year last week, ultimately voted to approve the one-year, retroactive extension. The Senate followed suit in a 76-16 vote Tuesday evening, on what was possibly its last day in session. President Barack Obama is expected to sign the legislation.
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