One Year PTC Extension Clears Senate

Just a day before the American Wind Energy Association’s national trade show kicked off in Texas, the U.S. Senate passed a one year extension of a tax law that’s been on everyone’s mind in the U.S. wind industry.

Austin, Texas – May 19, 2003 [] While the American Wind Energy Association (AWEA), which represents the American wind energy industry, has held a multi-year extension to the Production Tax Credit (PTC) tantamount in its legislative goals, this one year extension is “a very good sign” according to AWEA’s legislative director, Jamie Steve. Under present law, an income tax credit of US1.5 cents/kWh (adjusted annually for inflation) is allowed for the production of electricity from qualified wind energy facilities, “closed-loop” biomass facilities and poultry waste facilities. The current value of the credit is US1.8 cents/kWh of power produced. Many in the industry believe the tax credit is essential to continue wind power’s strong momentum. The cost of wind energy has decreased more than 80 percent over the past 20 years and currently averages under five cents per kWh with the PTC. A three-year extension of the PTC has been approved by both the U.S. House and Senate as part of comprehensive energy policy but that does little to quell the air of uncertainty in the industry and the investment community. Despite strong bi-partisan support in the past, PTC extensions have failed to become law before their termination deadlines since they were wrapped up in larger, contentious energy bills. This was the case in 2001 when comprehensive energy bill legislation including a PTC extension stalled – and the industry with it. This lead to a significant slowdown in new installed capacity. A similar delay, despite strong bi-partisan support, is still a possibility said Steve who sees the uncertainty not in whether the crucial PTC is extended, but if it’s extended before the end of the year. The current Senate extension however, is included with a multitude of tax legislation separate from the energy bill. This could provide a hedge against another delayed energy bill and provide renewed vigor to the wind industry during the months leading up the deadline. Six to eight months before the tax credit expires, financial lenders hesitate in providing capital for wind projects because of the uncertainty created by the impending expiration on the credit, according to AWEA. A rush to complete projects before the deadline leads to added costs resulting in higher electricity prices per kWh. Although it’s not the coveted multi-year extension that could provide a ripe and more predictable atmosphere for investment in the wind energy industry, the Senate’s one-year extension, if passed into law, would “remove a cloud of uncertainty” for the coming months, said Steve. The U.S. House of Representatives passed their own comprehensive tax package which did not include a PTC extension. Steve said this had less to do with support and more to do with PTC having been overlooked within the shear size of the tax bill. The House and Senate will meet in committee to finalize a comprehensive tax bill to go the President’s desk. Should the Senate’s extension survive the legislative wrangling within committee, it stands a good chance of gaining the President’s signature since the last three Bush administration budget requests called for the extension of the PTC. For the time being there’s no guarantee of the Senate’s bill passing, but the horizon for the American wind industry just got a little brighter. Jesse Broehl is in Austin, Texas covering Wind Energy 2003. Check for daily updates. He can be reached at


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