Tracking the stimulus: Locally owned wind projects stand to benefit, report finds

Wind power incentives in the big 2009 stimulus law could prove especially helpful for locally owned projects that have been historically tough to finance and develop, according to a new report from the Energy Department’s Lawrence Berkeley National Laboratory.

The economic downturn was wreaking havoc on traditional tax credit financing for wind project develoment because big banks and other project funders didn’t have the profits – and hence the tax liabilities – that the credits could be used against.

So the 2009 stimulus law changed the incentives – specifically allowing developers to claim an investment tax credit instead of one based on energy production over time – and more importantly allows the option of receiving a federal cash grant in lieu of tax credits.

So-called community wind – that is, locally owned projects that are now just a tiny fraction of overall U.S. wind market – could be the big winners from these policy changes, the report finds.

“On the basis of face value alone, the 30% ITC [investment tax credit] or cash grant – both of which depend on the size of the investment rather than on the quantity of power produced – will be worth more than the PTC [production tax credit] to most community wind projects, which on average may cost more or generate less than their commercial counterparts,” it states.

The report also charts several other benefits that “circumvent barriers that have plagued community wind projects in the United States for years.” For instance, the investment credit is exempt from the Alternative Minimum Tax, and the AMT is not applicable to the grants provided in lieu of tax credits.