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Tax credit extension a reprieve for wind

Jan. 4, 2013 at 1:56 PM   |   Comments

WASHINGTON, Jan. 4 (UPI) -- The U.S. Congress extended by one year the wind energy tax credit, seen as a lifeline for the wind power sector as part of the "fiscal cliff" package.

"Now we can continue to provide America with more clean, affordable, homegrown energy," Rob Gramlich, interim chief executive officer of the American Wind Energy Association, said in a statement.

Previously, the 2.2 cent per kilowatt-hour credit for wind power production applied only to wind projects that were completed and producing electricity. Under the new rules, it applies to any wind farm under construction by the end of 2013.

That gives companies up to an additional 24 months to complete projects, Tom Darin, AWEA's western regional representative told The Denver Post.

The association, citing a study by Navigant Consulting, said that half of the nation's 75,000 jobs in wind energy as well hundreds of U.S. factories in the supply chain would have been at stake if the production tax credit had been allowed to expire at the end of 2012.

Uncertainty about the continuation of the credit had resulted in scores of layoffs in the wind sector as companies halted new orders.

For example, much of the workforce at Gamesa USA, the Spanish wind-turbine manufacturer with U.S. headquarters in Langhorne, Pa., were furloughed in September.

"I think it will take a little while for this to work its way to the manufacturing sector, but it will be a stimulus," David J. Rosenberg, the company's vice president of marketing told The Philadelphia Inquirer.

While the tax credit has been in existence since the early 1990s, it has expired several times.

The AWEA had pushed for extending the credit for this year, then decreasing it to end after five more years, thus allowing the industry to more effectively plan its investments.

"It's really tough if you're a manufacturer and want to make a 30-year investment in a plant, to do that on the basis of federal policy that changes every few years," David Foster, executive director of the BlueGreen Alliance, a green-energy advocacy coalition of environmental and labor interests, told the Inquirer.

Still, there is uncertainty over the tax credit's future after 2013.

House Committee on Oversight and Government Reform Chairman Darrell Issa, R-Calif., said Wednesday that the wind power credit is of "serious interest" to his committee, The Hill reports.

"In 24 hours the heavily subsidized wind industry has gone from the verge of collapse to a modern-day Gold Rush," Issa told the newspaper in a statement, noting that the wind power credit's renewal and change "seems to create a perverse incentive" to rush production of additional facilities even when there may not be adequate demand for wind power.

The PTC, he said, falls under the committee's "ongoing oversight of the federal government's excessive and wasteful spending."

AWEA says that about 44 percent of all new electricity generation installed last year came in the form of wind turbines.

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