The production tax credit (PTC) has been preserved by Congress as part of last-minute legislation passed late Jan. 1 to avert the so-called ‘fiscal cliff’ of dramatic tax hikes and budget cuts.
Following a late-night vote by the House of Representatives, wind energy projects that start construction during 2013 would still qualify for the PTC.
The bill, including the PTC extension, now moves to President Obama’s desk for his expected signature, the American Wind Energy Association (AWEA) said in a Jan. 1 news release.
The version included in the last-minute deal would cover all wind projects that start construction in 2013. Companies that manufacture wind turbines and install them sought that definition to allow for the 18-24 months it takes to develop a new wind unit.
“On behalf of all the people working in wind energy manufacturing facilities, their families, and all the communities that benefit, we thank President Obama and all the Members of the House and Senate who had the foresight to extend this successful policy, so wind projects can continue to be developed in 2013 and 2014,” said Denise Bode, CEO of AWEA for the past four years.
Bode recently announced that she will be stepping down from that post and AWEA is starting its search for a new leader. Bode had recently noted that AWEA will be open to a multi-year phase-out of the tax credit.
AWEA last year expelled Exelon (NYSE: EXC), a large wind producing company that publicly opposed the trade group leadership by saying that the wind industry no longer needs the tax credit.
Wind set a new record in 2012 by installing 44% of all new electrical generating capacity in America, according to the Energy Information Administration, leading the electric sector compared with 30% for natural gas, and lesser amounts for coal and other sources, AWEA said.
However, America’s wind energy workers have been living under threat of the PTC’s expiration for over a year and layoffs had already begun, as companies idled factories because of a lack of orders for 2013. Uncertain federal policies have caused a “boom-bust” cycle in U.S. wind energy development for over a decade.
The PTC has enjoyed bipartisan support, partly because some of the largest wind production areas in the nation are Republican strongholds.
Bill includes renewable measures, tax extenders
The final fiscal cliff bill incorporated the “tax extenders” package that was passed in August by the Senate Finance Committee, the Offshore Wind Development Coalition noted in a statement.
The group said the renewable tax measures are good news for those seeking to develop offshore wind generation.
The Sierra Club and the geothermal industry, among others, also praised the congressional action.
Sierra Club Executive Director Michael Brune noted that lawmakers are extending the PTC and the investment tax credit (ITC) for wind energy for one year. “We are pleased that this latest barrier to protecting clean energy jobs in America has been overcome and we will continue our work to ensure that our nation creates jobs and a secure climate future with clean energy,” Brune said.
The Geothermal Energy Association (GEA) said changes enacted for terms of federal tax incentives for geothermal power will also help its business. “The Geothermal Energy Association estimates that new geothermal power projects in as many as a dozen states could be stimulated to move forward this year as a result of this change,” said GEA Executive Director Karl Gawell.
Finally, the American Gas Association expressed relief that the fiscal cliff bill will preserve and make permanent 15% tax rates for dividends and capital gains for individuals earning up to $400,000 per year or couples making up to $450,000 annually. Meanwhile, dividends and capital gains for families with an income of more than $450,000 will be taxed at 20%.
The dividend issue has been a big topic for electric and natural gas utilities. Keeping dividend taxes low “will help utilities expand and rebuild their infrastructure,” said AGA Board Chairman Ron Jibson.