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US Wind Tax Credit Extension Gives 'Brief Opportunity'

by Mike Godfrey, Tax-News.com, Washington

22 December 2014


While the United States wind energy industry sector has welcomed the inclusion of the production tax credit (PTC) within the recent one-year renewal of the package of tax extenders, it has been pointed out that it only provides a very short period for projects to be started.

The PTC is worth USD0.022 per kilowatt of energy produced, and is targeted to level the playing field between US-produced wind energy and cheaper non-renewable alternatives, such as natural gas.

In like manner to the rest of the tax extenders, which also expired at the end of 2103 and were retrospectively renewed following Senate approval on December 16 of the Tax Increase Prevention Act of 2014, the PTC has been renewed only to the end of 2014; for projects therefore that can start construction before January 1, 2015.

It was pointed out by the American Wind Energy Association (AWEA) that the sector has had to deal with uncertainty all year since the tax credit expired on December 31, 2013, and it had sought a renewal for, at least, the 24 months it takes to develop a new wind farm.

Businesses will now only have a brief opportunity to start construction to qualify new projects for the tax relief, but the AWEA has promised to continue seeking "a more stable policy" to allow wind power to continue its expansion.

"Unfortunately, the extension to the end of 2014 will only allow minimal new wind development and it will have expired again by the time the new Congress convenes," said Tom Kiernan, CEO of AWEA.

"The inclusion in this year's tax extenders bill is a reflection of the continued bipartisan support for wind energy," he added. "But when the 114th Congress begins, clean energy incentives will already be expired. There will be a lot of work to do as soon as possible in the new year to keep this important sector of the economy growing by providing longer term policy support."

The AWEA noted that the PTC has attracted an annual average of USD17bn in private investment to the US economy; wind power now provides enough power for over 18m American homes and promises to generate 20 percent of American electricity by 2030; and the industry has created an average of 73,000 full-time jobs over the past five years.

However, those statistics prompted the American Energy Alliance (AEA), which is part-funded by non-renewable fuel businesses, to declare that wind power generation is now a mature industry in the US, and that the PTC should therefore be unnecessary.

AEA President Thomas Pyle stated that "Christmas came early for wind industry lobbyists courtesy of the US Congress. By passing a retroactive extension of the PTC, Congress is taking money out of the pockets of hardworking Americans to stuff the stockings of foreign corporations and wealthy investors."

TAGS: environment | Energy | tax | business | tax incentives | energy | law | tax credits | legislation | United States | construction | Tax

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