A $12 billion U.S. tax credit for wind power has been extended for one year, and includes modified terms that may help the green tech sector from stalling this year.
The tax credit helped make wind the largest source of new capacity in the U.S. last year, according to New Energy Finance. Energy developers raced to complete work by December 31, 2012 to qualify for the tax credit of 2.2 cents a kilowatt-hour for power from wind farms.
Now that Congress has broadened the credit to cover wind farms that begin construction in 2013, and not just those that go into operation, development that had been on hold since mid-year can go back online.
While not every benefit of the extension will be realized until 2014 some advantages will come this year. Spain’s Iberdrola SA (IBE), the second-largest builder of U.S. wind farms, will pursue more developments this year than it would have without the new language in the extension.
The wind tax credit in particular had been the subject of intense lobbying in recent weeks. Exelon Corp., one of the largest U.S. utilities and a major wind-farm operator, lobbied against the extension, arguing it distorted electricity prices.
House Republicans who fought the extension said it exemplified expensive subsidies no longer necessary to sustain the green sector. The Joint Committee on Taxation estimated the cost of extending the wind-energy credit at $12 billion over 10 years.
Not all Republicans opposed the credit, however. GOP lawmakers from states with robust wind-power sectors like Iowa and Colorado argued the extension would be key to avoiding cutting 37,000-wind farm related jobs.
Ultimately, opposition wasn’t enough to topple the bill, which also includes tax credits for micro segments such as coal mining on Indian reservations, non-edible plant fuel development, and refining facilities that make fuel from wood in Mississippi.
Wind energy has the potential to supply as much as 20 percent of America’s electricity by 2030, according to projections from the U.S. Energy Department. AWEA, based in Washington, estimates that extending the tax credit will save as many as 37,000 jobs, according to a statement yesterday after the House passed the budget bill.
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