The wind industry faces uncertainty again as a key federal incentive for wind farms expires Tuesday, almost one year after getting a reprieve.
Unlike last year, there's no “fiscal cliff” deal to get Congress to act at the last minute to renew the wind production tax credit. A budget package passed earlier this month didn't include any provisions for the incentive.
Helping out this year is a change in the tax code in how companies can treat the timing of a qualifying wind project. The extension means developers now have to start construction by Dec. 31. That offers more flexibility than the previous requirement that a wind farm had to be producing electricity by the deadline.
In Oklahoma, there have been more than 1,500 megawatts of announced wind projects this year, said Kylah McNabb, renewable energy specialist with the Oklahoma Commerce Department. Many of the announcements came in the second half of the year as companies began filling orders again after uncertainty over the credit in late 2012.
“There was some thought that Oklahoma had reached a limit on how much wind it could use,” McNabb said. “But we've blown through that with a substantial amount going to out-of-state utilities.”
Among the deals signed were projects for utilities in Arkansas, Texas and Nebraska. Here at home, Public Service Co. of Oklahoma said it would purchase 600 megawatts of capacity from three wind farms to be built in the state.
Oklahoma had 3,100 megawatts of wind capacity by the end of 2012, putting it in sixth place among the states. One megawatt can power about 250 homes.
McNabb said she's fielded many questions from contractors, subcontractors and equipment suppliers in the past few months as many of the announced projects got close to beginning construction.
To qualify for the credit by the deadline, Internal Revenue Service rules require developers to start “physical work of a significant nature.” Wind developers can either meet certain construction milestones or spend at least 5 percent of the total project cost by the deadline. Qualifying wind farms still need to be generating electricity by 2016.