Political Push is on for Small Wind Tax Credit

Buried beneath the beltway whirl of plummeting stock prices and corporate accounting scandals, a congressional conference committee has been quietly working to bring the House and Senate versions of the country’s latest energy bill into alignment.

Washington, D.C.- July 24, 2002 [SolarAccess.com] Of the many ways the House and Senate Energy Bills differ, one has the small wind turbine industry spinning for attention. The House bill includes no tax credit for small wind while the Senate bill includes a 30 percent residential tax credit, capped at US$2,000 with no credit for businesses. The small wind turbine industry, with help from Sen. Dick Durbin (D-IL), is attempting to raise the proposed cap to US$1,000 per kW – the number proposed for fuel cells – along with a credit of 10 to 30 percent for businesses. “There has not been a broad-based energy tax package for many years and there probably won’t be another one for many more years so this is a window of opportunity for the less politically powerful constituencies to get the Congress’ attention,” said Mike Bergey, President of Bergey WindPower, who will travel to Washington this week to lobby for his industry. “Emerging technologies like small wind, solar, fuel cells and a number of the efficiency measures don’t have the political presence that conventional fuels do.” (For the purposes of this tax credit, small wind is defined as systems 75 kW and below, on or off grid.) In support of the tax credit changes, Durbin has drafted a letter that he hopes to have several other Senators sign before he sends it to the conference committee. Bergey has begun an e-mail based drive to encourage small wind enthusiasts to contact their U.S. Senators and encourage them to sign the letter. Durbin writes in his letter “Small wind systems … are the most cost-competitive, home-sized renewable energy technology. With advanced small wind turbines, individuals can generate their own electricity and cut their energy bills while helping to protect the environment. Wind turbines are also among the few renewable energy technologies for which American companies lead in technological advances and world market share.” Bergey echoed Durbin’s point, emphasizing the leadership American companies play in the small wind turbine market, especially overseas, off-grid rural electrification and telecommunications uses. “Small wind is one of the few Renewable Energy technologies areas where American companies lead in both technology and worldwide market share – but we have a very modest domestic market,” Bergey said. “(The tax credit) would create a substantial domestic market and a much stronger foundation for international competitiveness.” Approximately half of the market for small wind turbines lies overseas with much of the domestic market propelled by state rebate or tax incentive programs in states such as California and even tiny Rhode Island. Randall Swisher, Executive Director of the American Wind Energy Association said his organization is supportive of the proposed tax incentives and is working with Durbin’s staff on the legislation. “When you look at the tax code, small wind turbines are one of the only kind of energy options that don’t have any incentives,” Swisher said. “This is a hardship for the market. We’re already seeing a domestic market for small wind taking off in California. We think a federal tax credit could help stimulate the market in other parts of the country as well.” Under the current language of the tax credit included in the Senate version of the energy bill, a typical 10 kW residential wind system, which costs about US$35,000 would qualify for a US$2,000 tax credit – hardly enough to persuade many consumers to consider the option, Bergey argues. Depending on cost of electricity and the wind resource, a 10 kW system has a payback of eight to 20 years with net metering, where available, reducing that period by 10 to 15 percent. Under the proposal present by Durbin, the same system would qualify for a $10,000 tax credit. But first the language for the tax credit must make it out of the conference committee and into the final energy bill. Durbin and his staff have until Friday to add signatures to his letter. Bergey makes his plea to small wind supporters simply in an e-mail encouraging calls to Senate offices. “We’ve been waiting 17 years for this sort of an opportunity,” he wrote. “This is our one shot.” (Senator’s office numbers should be in your local phone books or you can get them by calling the Capitol Hill switchboard at 202-224-3121.)

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