Wind Energy Tax Break Debate Continues
A wind tower used to generate electricity consists of between 120-200 tons of steel plate per tower. So, when the U.S. Senate dismissed an extension of the wind energy tax break the impact could well impact plate production for years to come. SSAB CEO Charles Schmitt told those at the Platts/SBB conference this past week, “Energy is driving the plate side of our business…wind towers have been strong for the past 5 to 8 years with plenty of growth left.” However, with no tax break wind tower production would be negatively affected in a significant way.
A few days after the U.S. Senate shot down a proposal for extending a tax break for wind energy, a group of supporters introduced similar legislation in the hopes of a different outcome. This first proposal was for extending the tax break for one year as the tax break expires December 31, 2012 without a current extension.
The tax break, which according to the American Wind Energy Association (AWEA) is “the Production Tax Credit (PTC) provides an income tax credit of 2.2 cents per kilowatt-hour for the production of electricity from utility-scale turbines. This incentive was created under the Energy Policy Act of 1992. The PTC applies for the first 10 years of electricity production.” The incentive helps developers pay and complete the projects by helping to offset the cost of electricity during a wind farm’s first 10 years.
The AWEA reports that “wind project developers can choose to receive a 30% investment tax credit (ITC) in place of the PTC. For projects placed in service before 2013, at which construction begins before the end of 2011, developers can elect to receive an equivalent cash payment from the Department of Treasury for the value of the 30% ITC.”
A New York Times article indicates the reason for the Senate voting against the first proposed one-year extension as the “sponsors hadn’t identified any cuts in federal spending to offset the cost of the break.” The break will require cuts between $6-7 billion. The second proposal has asked for a two-year extension to bring certainty for the wind industry while focusing more on the “tax break for wind, hydro, geothermal and biofuels energy production,” according to the article.
“In the past five years, as the industry has benefitted from a continuous PTC, the wind industry has seen a robust average annual growth rate of 35%. Equally impressive, electricity from wind power capacity in the U.S. supplies electricity equivalent to that used by over 10 million American homes. There are now 38 states with utility-scale wind turbines. And, there are 75,000 jobs supported by the wind industry across all 50 states, including manufacturing jobs at over 400 facilities,” according to the AWEA.
Sources: New York Times & American Wind Energy Association