Hoping to woo a rested and reconvened Congress, the wind power industry yesterday opened a new front in its effort to extend the federal production tax credit (PTC) for wind generation, crediting the subsidy for driving down the costs of clean energy while aiding in the U.S. economic recovery since 2010.
“The PTC has been an effective, market-based policy that has enabled renewable energy development to meet the demands of American consumers,” the American Wind Energy Association said in a nine-page white paper. “While successful, however, the policy is still needed to encourage private sector investment in an industry that is still a relative newcomer when compared to traditional sources of energy.”
To keep those private-sector dollars flowing, AWEA argues that Congress should act quickly to restore the PTC, which provides a 2.3-cent-per-kilowatt-hour tax credit for wind energy developers and owners over the first 10 years of a wind farm’s operation.
The last PTC expired at the end of 2014, although many projects still under development will reap the benefit because they broke ground before the expiration of the tax provision. In July, the Senate Finance Committee advanced a bill that would extend the PTC through 2016. But the measure has failed to gain traction in the House, where some Republicans have sought a permanent repeal of the tax credit.
Among other things, critics argue that the PTC distorts energy markets by giving wind energy an artificial price advantage over competing fuels such as natural gas. Critics also say the PTC has outlived its purpose, and that the wind power industry should succeed or fail on its own terms.
Lisa Linowes, executive director of WindAction, an advocacy group opposed to tax breaks for wind energy, said in an email that the industry has sent mixed messages about its status. On the one hand, she said, AWEA touts wind power’s competitiveness with other fuels like gas, while on the other hand, it insists that the PTC is essential to its continued growth.
“The public is dizzy trying to follow AWEA’s rhetoric on the PTC,” Linowes said.
She added that the permanent elimination of the PTC would encourage the wind industry to gain even greater efficiencies to remain competitive and “shift business plans away from those [projects] based on tax avoidance to plans based on energy production — as they should be. American taxpayers, ratepayers and the wind industry would be better served.”
Will U.S. factories head overseas?
Wind energy advocates insist that the PTC is a sound federal policy that has helped an emissions-free source of electricity find a solid foothold in U.S. electricity markets while driving billions of dollars in investment and supporting more than 70,000 jobs.
Rather than burden utilities and ratepayers, advocates say, the PTC stimulates investment in an essential energy resource with no fuel costs and no carbon emissions. “Like other pro-growth policies, the PTC allows private companies investing in America’s future to reduce their tax burden,” AWEA states in the paper.
Moreover, AWEA says that a handful of independent studies — including from the Energy Department, Navigant Consulting and Bloomberg New Energy Finance — demonstrate that wind energy is now an economically viable alternative to fossil fuels, nuclear and other forms of power generation that have traditionally dominated U.S. electricity markets.
But wind energy’s growth will be undermined if Congress allows the expired tax credit to languish another year, or worse, be permanently repealed under legislation moving through the House, AWEA said.
Ultimately, lawmakers must face a “crossroads” where wind energy either continues to “make the further gains in productivity needed to achieve cost competitiveness with more traditional sources of electricity” under the PTC, or where tax policies dissuade “the private sector from making further investments … forfeiting the progress and cost reductions that have been achieved so far.”
Under such a scenario, U.S. wind turbine manufacturers would relocate factories and jobs overseas in search of more stable markets, the analysis predicts.
“The renewable energy PTC has been a tremendous success in driving technology improvements and cost reductions, but we need to finish the job,” AWEA CEO Tom Kiernan said in a statement. “You don’t push a boulder 90 percent of the way up a hill only to stop a few feet short and let it roll back down.”