Funding & Incentives
- Category: Funding & Incentives
03 Jan 2013
- Published on Thursday, 03 January 2013 09:45
- Hits (1089)
The long-awaited extension of tax credits for wind energy has arrived with the final passage of the American Taxpayer Relief Act of 2012.
The act seeks to avert a “fiscal cliff” or sharp decline in the budget deficit which many feared was inevitable in 2013 due to increased taxes and reduced spending.
Following its final passage by the House of Representative on Tuesday, President Barak Obama signed the act into law. This includes an extension of the wind energy Production Tax Credit and Investment Tax Credits for community and offshore projects and will include wind projects commencing development this year.
In a statement, the American Wind Energy Association lauded the decision saying that it would allow continued growth of the energy source that had the most new electrical generating capacity in the U.S. in 2011.
"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, chief executive officer of A.W.E.A.
"Now we can continue to provide America with more clean, affordable, homegrown energy, and keep growing a new manufacturing sector that's now making nearly 70 percent of our wind turbines in the U.S.A.," said Rob Gramlich, senior vice president of A.W.E.A.
Investment Tax Credit and Production Tax Credit
Wind energy has become the pillar of the U.S. energy sector and is touted as the leading source of new electric generation in the nation. In 2012, it is accounted for 44 percent of new electrical generating capacity in the country, according to a data from the Energy Information Administration.
Perhaps one of the key factors that contribute to the continuous growth of wind power in the U.S. was the establishment of the Investment Tax Credit and Production Tax Credit.
The Investment Tax Credit reduces federal income taxes for eligible tax-paying owners based on their capital investment in renewable energy projects. According to the U.S. Internal Revenue Service, it generally allows taxpayers to take single tax credit versus the project’s tax basis equivalent to 30 percent in its initial year. It also allows taxpayers to elect certain eligible facilities to be characterized as energy property qualified for a 10 percent or 30 percent I.T.C., depending on the technology.
The qualified renewable energy technologies include offshore wind, along with closed-loop biomass, open-loop biomass, geothermal, solar, small irrigation power, municipal solid waste, qualified hydropower production, marine and hydrokinetic renewable energy.
Meanwhile, the Production Tax Credit, created under the Energy Policy Act of 1992, provides $1.5 cents credit per kilowatt hour for electricity generated by wind energy.
It expired in 1999 and has been extended several times through many different laws, such as the Job Creation and Worker Assistance Act of 2002, the American Jobs Creation Act of 2004, the Energy Policy Act of 2005 and the American Recovery and Reinvestment Act of 2009.
The latter’s expiration in 2012 loomed over the U.S. wind industry for over a year with layouts taking place as companies idled operations because of uncertainties seen going into 2013.
Half of the U.S. jobs in wind energy, around 37,000 out of 75,000, and hundreds of U.S. factories in the supply chain could have been lost if the P.T.C. will not be extended, according to a report by Navigant Consulting. – C. Dominguez