A federal tax credit designed to encourage the construction of wind power is being phased out, and will no longer be available to those beginning construction at year’s end, according to the U.S. Energy Information Administration.
AES Corp., developer of Na Pua Makani, the proposed wind farm generating protests over the last week, said it has met requirements necessary to secure the tax credits.
The U.S. production tax credit, which provides wind farm operators with a tax credit per kilowatt-hour of renewable electricity generation for the first 10 years a facility is in operation, was initially set to expire at the end of 2012. But it was renewed in 2013, offering a maximum credit of of 2.3 cents per KWh, with incrementally reduced rates available in 2017, 2018 and 2019.
Facilities that begin construction after Dec. 31 will not be able to claim the production tax credit.
However, wind projects are eligible to receive the credit based on the year operation begins, or the year in which developers demonstrate 5% of total capital cost for the project has been spent and that construction has begun.
This qualification, known as “safe harboring,” is available as long as construction is completed no more than four calendar years after it has begun.
Still, AES faces numerous hurdles on various fronts.
The construction of Na Pua Makani, a 25-megawatt wind farm with eight turbines on Oahu’s North Shore, has sparked a Ku Kia‘i Kahuku movement among residents who have vowed to put up a long fight against its installation.
Dozens have been willing to get arrested overnight while blocking the delivery of wind turbine parts to Kahuku. AES is permitted to deliver turbine parts from 11 p.m. to 5 a.m. Sunday through Friday, and could need until Nov. 26 to transport all of it.
In addition, an environmental group has filed a claim with the state Public Utilities Commission seeking to invalidate the project’s 2014 power purchase agreement with Hawaiian Electric Co. Another group is appealing a state circuit judge ruling earlier this year affirming the state Board of Land and Natural Resources’ approval of the project’s habitat conservation plan.
State Sen. Gil Riviere (D, Heeia-Laie-Waialua) said AES just wants to start making money despite concerns from the community.
“Wind developers have gotten an inordinate amount of tax credits,” he said. “The community has said no again and again for 10 years. … This is a reaction to government not listening to the people. This is regulators just ignoring the will of the public and just jamming it down their throat.”
When asked whether they had any plans to meet with community members, AES spokeswoman Verla Moore said in a written statement Tuesday, “We continue to have many conversations with community members from Kahuku and the surrounding North Shore neighborhoods in one-on-one and small group settings. We respect the protesters who are acting in Kapu Aloha and take seriously our commitment to continue a conversation.”
The EIA said it expected another 12.7 gigawatts of wind capacity to be added in the U.S. this year due to tax incentives, with most projects coming online in December.
Na Pua Makani, which says it expects to be operational in summer 2020, would be the third wind farm on Oahu’s North Shore, in addition to two existing ones completed in 2011 and 2012.
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