Facing the loss of some tax incentives at the end of 2016, Oklahoma’s wind industry might accelerate the already rapid pace of wind development over the next 18 months as projects try to beat the deadline.
The question is what happens after Jan. 1, 2017, when some of the incentives disappear.
Responding to complaints that wind subsidies were creating a burden on the state budget, the Legislature voted earlier this year to let two types of tax credits expire. Senate Bill 498 will do away with a five-year property tax exemption for wind developments, while SB 502 will prevent wind developments from using a “new jobs” tax credit.
Gov. Mary Fallin signed both laws last month, but neither bill will take effect until the end of next year, giving current developments a chance to be finished before the financial landscape changes, said Richard Mosier, a Claremore attorney who is part of the Oklahoma Property Rights Association, which lobbied against wind subsidies.
“I don’t think it will slow down the development of wind energy in Oklahoma,” Mosier said.
“And that was never really the goal. Our goal was to raise awareness of how much it was costing.”
Tax exemptions and tax credits for wind energy cost the state nearly $49 million last year. Left unchanged, the price tag would have reached $77 million by 2018, according to estimates from the Oklahoma Tax Commission.
Wind developments, however, still qualify for Zero Emission Tax Credits, which drew some of the heaviest criticism from Mosier and other opponents of wind subsidies because they are “open-ended.” The more megawatts generated, the more tax credits received, making it impossible for the state to know exactly how much to budget for the subsidies, Mosier said.
“We didn’t get everything we wanted,” Mosier said.
A major wind developer called the tax changes a “strong compromise.”
It “will keep Oklahoma’s wind industry competitive,” according to a statement from Enel Green Power North America, which is responsible for the Osage Wind project west of Pawhuska, “while also providing a level of predictability for future development, while also providing some relief to Oklahoma’s budget drafters.”
This year, the state Legislature also approved some minor restrictions on where wind turbines can be built, requiring a 1.5 nautical mile setback – roughly 1.73 miles – from schools, airports and hospitals.
Mosier had hoped to require similar setbacks from homes, parks and other sensitive areas.
“That will be an issue for another day,” he said.