Horror of horrors: Wind industry might have to deal with a lapse in their production tax credit

posted at 3:21 pm on November 5, 2013 by Erika Johnsen

All the wind industry wanted for Christmas last year was a continuation of the much-prized production tax credit on which they so heavily rely for market viability, and they finally received the only slightly belated gift of special federal treatment when Congress passed that last-minute fiscal-cliff deal in January — much to their momentary relief.

But Politico reports that, as Congress gets to work on a tax reform package that could take months to complete, it’s looking more and more likely that the PTC on which the wind industry places so much vital importance may expire at least temporarily by the end of the year:

That expiration could hurt the wind industry, which saw construction of new wind projects grind to a virtual halt this year amid uncertainty over the subsidy. The production tax credit gives wind power owners a tax credit of 2.3 cents for each kilowatt-hour of electricity they produce.

One Senate aide said tax writers in Congress aren’t even talking about a year-end extenders package, which traditionally allows for the continuation of credits like the PTC. Without an extenders package, PTC supporters must pin their hopes on reviving the tax credit as part of broader tax reform, which isn’t expected to move until next year, if at all.

(“Construction of new wind projects” ground to a “virtual halt this year amid uncertainty over the subsidy.” As in, without this gigantic subsidy in place, companies don’t even want to bother with wind projects, because sustaining a viable business model becomes too risky? …Red flag? Hello?)

“We must, as a country, get out of this unpredictable, uncertain pipeline environment,” the [American Wind Energy Association]’s CEO Tom Kiernan said Thursday.

Still, there was one silver lining to January’s one-year PTC extension. The wind industry won inclusion of language that makes it easier for companies to qualify for the tax credit. Now companies can take advantage of the tax credit as long as they start construction by Jan. 1, 2014. Previous rules required companies to have completed the project by the time the credit sunsets to qualify.

That gives the wind industry a small cushion if the PTC does expire at the end of the year, and project developers are ramping up work on several megawatts of projects to qualify under this year’s subsidy.

The start-construction language is “giving us a little more stability,” Kiernan said, but an expiration could still hurt the industry. He added that it’s “essential” that the PTC is extended by the end of 2014.

I wholeheartedly agree that we should get rid of this “unpredictable, uncertain pipeline environment,” but I would suggest that that could be better and more simply achieved by simply getting rid of the tax credit rather than continuing to cater to a bunch of rent-seeking lobbyists and doling out special treatment based on nothing more than political whimsy. As I’ve now argued many times before: If alternative-energy enthusiasts really want to encourage the innovation and price efficiencies that can help to make their preferred renewables economically viable and independently competitive, then years of heavy subsidization is not doing wind energy or anything else any long-term favors.


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Companies buy politicians……Politicians steer business to companies/supporters.

Repeat as necessary.

PappyD61 on November 5, 2013 at 3:30 PM

If alternative-energy enthusiasts really want to encourage the innovation and price efficiencies that can help to make their preferred renewables economically viable and independently competitive, then years of heavy subsidization is not doing wind energy or anything else any long-term favors.

I don’t think “alternative-energy enthusiasts” give a flying fig about “innovation and price efficiencies”. Wind power must be continued with subsidies because…..because…..because “the environment, dammit!!”

Bitter Clinger on November 5, 2013 at 3:34 PM

The moment the subsidies dry up the wind stops blowing as the wind farms are abandoned.

ajacksonian on November 5, 2013 at 3:37 PM

“As president, I’m committed to the idea that wind power is vitally important to our country’s energy future, so I’m going to bypass Congress and extend the wind energy tax credits via executive order.

“I’ve already spoken to members of the media and applicable federal courts, and we all agree this is the right thing to do.

“I’m hopeful that our colleagues in Congress, on both sides of the aisle, will join us by passing supporting legislation that agrees with this goal.”

Marcola on November 5, 2013 at 3:38 PM

Since Obama is so keen on the European Model, he might want to consider that Europe is chopping its wind power subsidies faster than those towers can take out an eagle.

de rigueur on November 5, 2013 at 3:38 PM

What are they going to do…this is a crisis!!!….

PatriotRider on November 5, 2013 at 3:40 PM

Addendum:

“We’ll be able to pay for the wind energy tax credits by reallocating money already approved by Congress for other purposes.

“Specifically, we’ll use the money that was to be given to Congress to provide Obamacare insurance policy subsidies to Congressional staffers.”

Marcola on November 5, 2013 at 3:42 PM

Wind industry might have to deal with a lapse in their production tax credit

WOW that’s serious !…

Guess our only option is we gotta pull all these sumabitchin’ eyesores out by the roots !! :D

BigSven on November 5, 2013 at 3:51 PM

Marcola on November 5, 2013 at 3:42 PM

Frightening, but believable, Marcola.

GWB on November 5, 2013 at 4:01 PM

So why doesn’t the Sierra Club subsidize them, they seem to have lots of money to spend on the environment??

KenInIL on November 5, 2013 at 4:09 PM

Going back a decade or more since the first wind farms, the pattern has been common. There is no natural profit in wind (or any alternate energy scheme). When government subsidies, local or federal, expire, so do the wind farms. They have always been abandoned to either rot or become charity wards of public utilities. As mentioned above, Britain and other European governments are consistently parking their mills. In some areas, particularly Scotland, the eyesore protest is very heavy to prevent desecration of the landscape that is often their only means of employment. The gas, coal and oil peaking generators that must be kept turning to make up for inconsistent production are eating their budgets alive. Wind looks cool, but it’s a flaming wreck to pursue.

ironked on November 5, 2013 at 4:11 PM

Translation:

If wind power can not be built for on-grid supply without the subsidy, then every single windmill you pass by connected to the grid is a tax.

The cost of that subsidy comes from somewhere. Eventually the customer pays it. They can pay it through higher taxes needed to pay the subsidy or in higher electric rates to guarantee the “feed in” rate paid to the producer of the power.

Wind power is just another tax.

crosspatch on November 5, 2013 at 4:13 PM

“Alternative Energy” means that the power plants burn taxpayer money instead of coal.

You get pollution either way, but higher unemployment and higher energy bills with “Alternative Energy”!

landlines on November 5, 2013 at 4:17 PM

“Wind industry might have to deal with a lapse in their production tax credit”
…ya gotta feel sorry for those crony capitalists that are constantly sucking on the hind-teat of taxpayers via a corrupt federal government. Hey guys, I feel your pain (NOT !).

TeaPartyNation on November 5, 2013 at 4:26 PM

I want the rural landscape back… I hate wind farms immensely.

Fallon on November 5, 2013 at 4:29 PM

“We must, as a country, get out of this unpredictable, uncertain pipeline environment,” the [American Wind Energy Association]’s CEO Tom Kiernan said Thursday.

Why don’t we get into a predictable, certain Keystone pipeline environment? We might end up with gasoline under $3 a gallon!

Steve Z on November 5, 2013 at 4:55 PM

The fact is that when you consider the costs and energy used to produce and maintain the windmills, they represent a net loss in both money and energy over their expected lifetimes. The subsidies ARE the profit in them, the ONLY profit in them.

Solar collectors are nearly as bad, although the worst costs associated with their production are environmental, making them a net harm to the environment by the time they are installed.

They are putting up “solar farms” over open spaces now with no regard at all to the life forms being shut off from sunlight. Fields, plains, and even deserts have their own “ecosystems” that are damaged, but these environmental concerns – which would be enough to shut down a proposed manufacturing plant or agricultural building – aren’t mentioned when the beneficiary is a favored industry stocked with Obama cronies.

Adjoran on November 5, 2013 at 5:36 PM

“Wind industry”…idiocracy.

Murphy9 on November 5, 2013 at 5:47 PM

We give people a tax credit for the production of “wind”?
Only the Pelosi/Reid Congress could have come up with anything as idiotic as this.
Probably created after a long dissertation by Henry Waxman, and everyone thought: If only we could harness that hot air?

Another Drew on November 5, 2013 at 6:03 PM

I want the rural landscape back… I hate wind farms immensely.

There are very few problems that cannot be solved by the proper application of high-explosives.

Another Drew on November 5, 2013 at 6:04 PM

So why doesn’t the Sierra Club subsidize them, they seem to have lots of money to spend on the environment??

KenInIL on November 5, 2013 at 4:09 PM

Disclaimer: I am a card-carrying member of the Appalachian Mountain Club, which is about as Leftist as Sierra Club is. I’m a member solely to support their trail maintenance efforts, as well as their wonderful system of high mountain huts in New Hampshire’s White Mountains. But recently I have expressed my concerns to AMC over their total lack of concern for the recent erection of a 24 tower wind farm less than a mile across the valley from one of the only peregrine falcon nesting sites in NH. These towers are 4 times as tall as the proposed towers that AMC is rabidly protesting that will bring cheap hydropower down here from Quebec, along mostly pre-existing power line rights-of-way. AMC demands that the entire line be buried-which would double (at least) the total cost of the project. Their response: Sound of Crickets.

I want the rural landscape back… I hate wind farms immensely.

Fallon on November 5, 2013 at 4:29 PM

Said wind farm I mention above has only been online for 10 months, but is already generating a ton of controversy. The same (Spanish) firm that built it wants to build a second, much larger project just to the southwest. Even the local tree huggers are up in arms in opposition!

Del Dolemonte on November 5, 2013 at 8:12 PM

Simple solution to our wind energy needs.
Install a huge wind turbine outside the White House and the Capital building and their hot air alone could power the East Coast all by themselves.

sh221b on November 5, 2013 at 10:00 PM

So why doesn’t the Sierra Club subsidize them, they seem to have lots of money to spend on the environment??

KenInIL on November 5, 2013 at 4:09 PM

Disclaimer: I am a card-carrying member of the Appalachian Mountain Club, which is about as Leftist as Sierra Club is. I’m a member solely to support their trail maintenance efforts, as well as their wonderful system of high mountain huts in New Hampshire’s White Mountains. But recently I have expressed my concerns to AMC over their total lack of concern for the recent erection of a 24 tower wind farm less than a mile across the valley from one of the only peregrine falcon nesting sites in NH. These towers are 4 times as tall as the proposed towers that AMC is rabidly protesting that will bring cheap hydropower down here from Quebec, along mostly pre-existing power line rights-of-way. AMC demands that the entire line be buried-which would double (at least) the total cost of the project. Their response: Sound of Crickets.

I want the rural landscape back… I hate wind farms immensely.

Fallon on November 5, 2013 at 4:29 PM

Said wind farm I mention above has only been online for 10 months, but is already generating a ton of controversy. The same (Spanish) firm that built it wants to build a second, much larger project just to the southwest. Even the local tree huggers are up in arms in opposition!

Del Dolemonte on November 5, 2013 at 8:12 PM

Environmental groups are much more about leftist politics then they are about the environment. I would consider dropping your membership in the AMC and attempt to find another way to support those projects you like.

Lol on the name.

jpmn on November 6, 2013 at 7:13 AM