Project Development, Wind Power

U.S. Legislators Still Pushing for PTC Extension

The production tax credit (PTC) for wind power, which many in the U.S. wind industry believe is essential to sustaining the rapid growth of the industry, has been in the legislative spotlight lately with the introduction of a number of proposals to extend it beyond 2003.

Washington D.C. – March 5, 2003 [] U.S. Senator Byron Dorgan (D-ND) has introduced legislation to boost wind energy production in the United States by extending for five years a wind energy production tax credit that is set to expire at the end of this year. Dorgan is not alone. U.S. Sen. Chuck Grassley, chairman of the Committee on Finance, also introduced legislation called the Bipartisan Renewable, Efficient Energy with Zero Effluent (BREEZE) Act. The bill was introduced with 12 bipartisan co-sponsors and would extend the wind PTC for three years. Whether the extension ends up at three or five years, the current tax credit is set to expire on December 31, 2003 and this has raised much concern from both the industry and legislators who see wind energy as a way to both strengthen and diversify U.S. energy assets with environmentally benign renewable technologies. “We are dangerously dependent on foreign oil,” Dorgan said. “We need to get serious about developing new energy sources and diversifying our energy supplies. Doing so will increase our national security and create new economic opportunities here at home.” The U.S. Department of Energy has identified Dorgan’s state of North Dakota as the state with the most wind energy production potential in the United States, describing it as a possible “Saudi Arabia of wind energy.” Currently, commercial producers of electricity from wind energy can claim an income tax credit of 1.8 cents per kWh of electricity generated. That tax credit is “essential” to encouraging this emerging industry, Dorgan said, noting that the last time the wind energy production tax credit was allowed to expire, new wind investments dropped sharply. It is important that the credit be extended for a longer period of time than just one or two years, Dorgan added. “Producers need certainty in order to make these investments, as well as time to plan and build,” Dorgan said. “Extending the credit for five years will provide both.” Many are concerned the impacts on the industry will mirror the impacts in the past. “Congress has allowed the PTC to expire twice before renewing it – in 1999 and 2001 – and each time the impact on our industry has been devastating,” said Randy Swisher, executive director of the American Wind Energy Association, discussing the PTC earlier this year. Wind energy investments plummeted from 661 MW installed in 1999 to only 53 MW in 2000 after the PTC expired in 1999. After it expired in 2001, new installations dropped significantly again, from 1696 MW installed in 2001 to just 410 MW in 2002. Central to the industry’s agenda in 2003, Swisher said, will be a proposed multi-year extension of the existing federal wind energy production tax credit, such as both Dorgan and Grassley have proposed. Co-sponsoring Dorgan’s measure, are Senators John Breaux (D-LA), Dick Durbin (D-IL), Patrick Leahy (D-VT), Tom Harkin (D-IA) and Tim Johnson (D-SD).