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Wind energy development faces sharp drop without federal tax credit

A tax credit for wind is set to expire at the end of the year, leading to industry fears of another boom-and-bust cycle of wind energy development.
by Paul Monies Published: March 23, 2012

Wind developers will need to move fast if they want to meet a year-end deadline for a federal tax credit that has been critical to the industry's growth.

The wind production tax credit has become mired in election-year politics and faces an uncertain future beyond Dec. 31, when it expires.

An extension to the credit failed last week in the U.S. Senate when it was offered as an amendment to a multiyear transportation funding bill. Several pieces of legislation remain, including a bill co-sponsored by Rep. Frank Lucas, R-Cheyenne.

The incentive allows for a 2.2 cent per kilowatt-hour tax credit for electricity generated by wind. It dates to 1992, but Congress let it expire a couple of times since then. That's contributed to a boom-and-bust cycle for the industry.

The tax credit should amount to $1.3 billion for the 2012 fiscal year, according to estimates by Congress' Joint Committee on Taxation.

Wind projects can take between nine to 16 months from groundbreaking to generation. Factories producing turbines and blades remain busy for projects in the pipeline but aren't getting many new orders for 2013 because of uncertainty over the tax credit, said Matt Kaplan, associate director of the wind advisory service for IHS Emerging Energy Research.

Kaplan said political predictions are risky, but he doubts Congress will approve any extension of the tax credit before November's elections.

Nationally, about 12 gigawatts of wind generation capacity will be added this year, he said. IHS projects that will fall to 1.5 gigawatts in 2013 if the tax credit expires.

“That's a massive decline all created by this uncertainty,” Kaplan said.

Oklahoma ranks eighth in the nation in wind-power generation and has about 1,000 megawatts of wind energy under development through the end of the year, said Kylah McNabb, wind development specialist for the state Commerce Department. Completion of those projects would bring the state to more than 3,000 megawatts generated from wind energy, she said.

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by Paul Monies
Energy Reporter
Paul Monies is an energy reporter for The Oklahoman. He has worked at newspapers in Texas and Missouri and most recently was a data journalist for USA Today in the Washington D.C. area. Monies also spent nine years as a business reporter and...
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