WASHINGTON – A year-end spending and tax deal struck by Congressional leaders could provide at least a short-term boost to developers of off-shore wind power projects like those in Massachusetts.
Rep. William Keating, D-Bourne, said Wednesday that the omnibus spending and tax extender bills would insure wind tax credits are available over the next five years rather than year by year. The longer time frame, he said, would provide the industry needed reassurances as they develop these multi-year projects.
“That is huge,” he said during an interview off the House floor. “So, there is going to be investment. And, this will accelerate that investment in clean energy. It will have a huge impact in my district because it means jobs – particularly jobs for those at the New Bedford terminal.”
Rep. Joe Kennedy III, D-Brookline, offered a similar take, noting that industry officials have said that extending the tax credit was more critical than the actual size of the credit.
“Given the timeline of these projects, getting the business community some certainty that those tax credits will remain in place is absolutely critical. It provides some trajectory of certainty to them on what they can count on,” Kennedy said.
But, Sen. Ed Markey, D-Mass., offered a more pessimistic assessment, noting that the bill calls for an end to the credit after the extension expires.
Markey went to the Senate floor to speak against the deal that would lift a four-decade ban on oil exports – sought largely by Republicans – and extend tax credits and other benefits for alternative energy – sought largely by Democrats.
“In exchange for another permanent benefit for Big Oil by lifting the export ban, Republicans would only extend wind and solar tax credits for a few years that end with them being phased out,” Markey said. “That’s not a good deal for America or New England. The wind tax credits being phased down through 2019 could be a deathblow for Massachusetts’s nascent offshore wind industry that needs the additional time and assistance to get projects off the ground off our shores.”
Under the legislation, the Production Tax Credit and alternate Investment Tax Credit would be extended for 2015 and 2016, and continue at 80 percent of present value in 2017, 60 percent in 2018, and 40 percent in 2019. As before, the rules will allow wind projects to qualify as long as they start construction before the end of the period.
The credit is currently worth 2.3 cents a kilowatt-hour of electricity generated for the power grid. Combined with continued growth in demand for low-carbon fuel sources, that is intended to keep wind energy attractive for the investors who finance new wind farms, according to the American Wind Energy Association.
Tom Kiernan, CEO of the American Wind Energy Association, said in a statement that the multi-year extension of renewable energy tax credits would secure several years of predictable policies that encourage private investment in wind energy.
“This plan will drive more development, and near-term prospects look strong – especially as utilities, major end-use customers, and municipalities seek more low cost emissions-free renewable energy,” he said.
But, Kiernan agreed that phasing out the credit could cause long-term problems.
“In order to keep the wind energy success story going, we will need to continue to work with Congress and the White House in the years ahead to level the playing field with other energy sources that receive permanent tax support,” he said.
The performance-based PTC has helped more than quadruple wind power in the U.S. since 2008 – up from 16,702 megawatts (MW) installed at the start of 2008 to 69,470 MW by the third quarter of 2015. This is enough power to supply over 18 million American homes, according to AWEA.
Keating and Kennedy said they were still reviewing the massive bills before deciding if they will support them. In the meantime though, they said they do support extending the tax credits for wind power in the hopes that it will bring jobs and electricity to Massachusetts as the Pilgrim nuclear plant phases out.
Several wind power projects have been proposed to be anchored about 15 miles off Martha’s Vineyard. Keating said that the developers are committed to using the New Bedford Marine Commerce Terminal, which the state invested $113 million into, to handle the massive wind turbines that will be needed for the projects.
“The offshore wind industry is going to be an employer for our region,” Keating predicted.
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