Congress Extends Wind Energy Tax Credits for Projects that Start in 2013
After much controversy and debate, Congress passed the American Taxpayer Relief Act of 2012 on January 1, 2013. The legislation includes a range of spending cuts and tax advantages to avert the potential “fiscal cliff” posed by expiration of tax policies. The Energy Tax Extender section of the legislation includes a long-sought extension of the wind energy Production Tax Credit.
The tax credit extensions cover all wind projects that start construction in 2013. Therefore, because it may take 18 to 24 months to develop a new wind farm, this extension is actually a two year to three year extension of the credit. It is anticipated to save up to 37,000 jobs, revive business at nearly 500 manufacturing facilities across the country and allow continued growth of wind energy in both community and offshore projects.
Wind energy generation facilities set a new record in 2012 by comprising 44 percent of all new electrical generating capacity installed in the United States in that year, according to the Energy Information Administration. Wind is the leading electric sector compared with 30 percent for natural gas, and lesser amounts for coal and other sources. Wind is becoming one of the fastest growing U.S. manufacturing sectors with at least 472 factories currently supplying the wind industry, up from 30 factories in 2004.
Despite growth of the wind energy industry, sporadic extension and expiration of the tax credit is the source of boom-bust cycles in the wind industry since enactment of the tax credit as part of the 1992 Energy Policy Act. The threat of the tax credit expiring at the close of 2012 spurred wind energy worker layoffs and caused factories in the supply chain to idle late in the year due to lack of orders. With the temporary relief from the extension, wind energy advocates plan to campaign for a long term solution with hopes of avoiding another bust cycle. Most politicians, however, currently maintain that this most recent extension of the wind energy tax credit will be the last.