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EIA: Threat of losing tax credit drives wind installations
Developers are rushing to get wind turbines online before a wind power incentive expires, according to the U.S. Energy Information Administration (EIA).
EIA observed that developers planned more installations to take advantage of the credit as the year progressed. As of Nov. 30, EIA noted about half of the new planned wind power capacity this year has yet to come into service, but should be operational by Dec. 31 when the credit is scheduled to end.
“If all planned wind generators for 2012 come on line, as reported by industry participants, wind capacity additions could top 12,000 MW (megawatts) for this year. This would account for 45 percent of total additions and exceed capacity additions from any other fuel source, including natural gas, which was the leading fuel source for electric generating capacity additions in 2010 and 2011,” EIA said.
EIA said the spike in installations this year was consistent with other years when the credit faced expiration.
In December 2011, EIA said about 5,000 megawatts of new wind capacity was anticipated for 2012. That figure rose every quarter thereafter, with a final expectation of more than 12,000 megawatts of new generating capacity this year.
Fiscal conservatives say the rush in activity to complete shows wind power is not competitive with other energy industries. They argue the federal government cannot afford to prop up wind, especially given the deficit situation.
The credit’s supporters say it has helped bring the wind industry closer to self-sufficiency. They call the industry a boon for job growth, drawing upon a wind industry-commissioned study that says axing the credit would eliminate 37,000 jobs.
The American Wind Energy Association (AWEA), the main wind trade group, last week suggested extending the credit one year and then phasing it out after five. It said wind would be cost-competitive with other energy sources by the end of that timeframe.
AWEA wants to make sure the one-year extension includes a key language change.
Wind projects would only need to be under construction — rather than in service — by Dec. 31, 2013, to get the credit for a 10-year period. That would come with a $12.1 billion cost though 10 years.
For now, the credit’s fate is wrapped up in “fiscal cliff” talks between President Obama and Speaker John Boehner (R-Ohio).
Boehner’s “Plan B” package to avoid automatic spending cuts and tax increases did not include any energy tax credit extensions.
Still, energy insiders expect the wind credit to get a one-year extension.
Most of the nation’s wind installations lie in GOP districts, helping attract vocal Republican backers for the credit’s extension. A good many other House Republicans have not weighed in on the issue.
In the upper chamber, the Senate Finance Committee already has approved a $205 billion tax-extenders package that includes the wind credit.
Obama also pledged to extend the credit during the campaign, raising the issue often in wind-heavy swing states such as Iowa and Colorado.
