Wednesday, January 16, 2013

Wind Turbine Tax Credit is Renewed

Until the very end of 2012, industry experts were predicting that the construction of new wind turbines for generating electricity would decline by as much as 90 percent in 2013. That was because a tax credit amounting to about $1 million dollars per windmill was set to expire on Dec. 31, 2012. Wind turbine developers rushed a lot of new wind turbines into production in 2012 in order to take advantage of the credit, but had essentially no plans for new construction in 2013. Had the tax credit actually expired, more than 30,000 jobs might have been lost in the industry.

But the industry got a last-minute reprieve as part of the fiscal cliff negotiations in the final days of 2012. Part of the tax package included in the final fiscal cliff deal was an extension of the tax credit for wind turbine construction that begins in 2013, provided that construction is completed by 2014. That gives the industry some breathing room, at least for now.

Federal tax credits are sometimes used to encourage the development of new industries that may not yet be cost-effective. The wind turbine industry has been granted tax credits three times since 1990. This time around, concerns over the national debt mean that there is likely to be very little enthusiasm in Congress for extending the subsidy (amounting to over a billion dollars a year) yet again after this one expires.

Currently, wind energy accounts for 23 percent of all electricity generated from renewable resources, according to government statistics. The other renewable energy sources are hydropower (63%), wood and biomass waste (11%), geothermal (3%), and solar.

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