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Energy groups to Obama: Change in wind credit would boost renewables investment
A change to the text of a wind-power tax credit would increase investment in several types of renewable energy, industry groups told President Obama.
The groups say that while credits for their industries are locked in through 2013, altering the incentive’s language within the Senate Finance Committee’s tax package would boost investment for 2013.
The change would allow geothermal, hydropower, waste-to-energy and biomass projects under construction before 2014 to collect a 2.2-cent per kilowatt-hour credit for power production. Currently, those projects must be in service by 2014 to receive the incentive.
“A rule that will allow renewable projects to go forward based on when construction begins is a major policy improvement that will allow many more clean energy projects to move forward,” the groups told Obama in a letter dated last week and obtained Tuesday by The Hill.
The wind industry has been on the front line for continuing the credit, which expires Dec. 31.
But the groups say the language change is just as important to their industries as the one-year extension is to wind-energy producers.
They said biomass, geothermal and hydropower projects face a longer permitting and construction process than wind power. They said the adjustment would relieve investor anxiety about meeting the Dec. 31, 2013, deadline.
“The Finance Committee recognized that many renewable power projects are unable to move forward because developers and investors are concerned that those projects cannot be completed before the renewable electricity production credit expires,” they wrote Obama.
Karl Gawell, executive director of the Geothermal Energy Association, told The Hill the modification would generate as much as $4 billion of geothermal investment.
“It would turn next year from being a real bust year ... to a real boom year,” he said.
Gawell said the requirement that projects come into service by 2014 to receive the credit is shutting geothermal projects out of competitive bids.
He said that is because project developers cannot assure the utilities with which they contract that the credit will remain in place. Proving projects can meet the Dec. 31, 2013, deadline for coming online also is proving troublesome, he said.
For now, renewable energy industries affected by the tax credit are in a holding pattern.
Sen. Chuck Grassley (R-Iowa) has said the Senate will not move the tax extenders package while Obama and Speaker John Boehner (R-Ohio) work on a pact to avoid deep automatic spending cuts and income tax hikes slated for Dec. 31.
Fiscal conservatives oppose extending the wind credit, arguing the federal government needs the revenues to shrink the deficit.
But Gawell said he would hold out hope that those talks yield the change his and other renewable energy industries seek.
“Some people hate it when Mr. Obama and Mr. Boehner are talking. But when principals get together and talk, things can change,” he said.
— The story was updated at 2:01 p.m.
