Congress revived and expanded the production tax credit (PTC) and investment tax credits for wind projects in its most recent tax bill, which includes $12.1 billion for wind energy investments.
The fiscal cliff tax deal, which includes $12.1 billion for wind energy investments in 2013, is expected to save jobs and spur growth in the industry
To the relief of the wind energy industry, Congress revived and expanded the production tax credit (PTC) and investment tax credits for wind projects in its most recent tax bill, which President Obama signed on January 3. The bill includes about $18.1 billion in tax credits for the energy industry, of which $12.1 billion will go for wind energy investments.
In 2012, the wind energy industry set a new record by installing 44% of all new electrical generating capacity in America, according to the U.S. Energy Information Administration. On average, the U.S. wind industry has garnered $15.5 billion a year in private investment. However, for over a decade, the industry’s development has been on a boom-and-bust cycle due to uncertainty over federal policies covering tax credits for wind-generated energy.
The subject of much debate in Congress, the PTC for wind, which offers 2.2 cents per kilowatt hour of wind power production, had been allowed to expire by the time the new deal was reached. Previously, the credits were only available to wind farms once they were built and producing energy, making the investment a gamble in times of uncertainty for the credits. The expansion in the bill allows any wind project that breaks ground in 2013 access to the credits when production begins. This change takes into account the 18- to 24-month timeline it takes to build a wind project.
Recently, the industry had begun laying off workers as projects for 2013 were put on hold due to uncertainty over the credits. The nearly 500 turbine parts manufacturers across the country were slowing production because of a lack of orders. According to Navigant Consulting, 37,000 of the 75,000 jobs in the U.S. wind industry would have been lost had the PTC remained expired.
Jay Carney, White House spokesman, said that President Obama favored the wind energy credit and tax benefits for research and development to encourage "job-creating research investments."
Still, the extension of the tax credits for wind projects is only temporary. The American Wind Energy Association is proposing an extension with a gradual phase out through 2018. But opponents in Congress have vowed to return to the issue as soon as the next congressional session begins.