Wind will continue to be supported with the 2.2 cent/kWh production tax credit for another year. Eligible projects get the PTC for 10 years. Analysts claim that the legislation will protect some 37,000 jobs as an amendment to the “fiscal cliff” legislation extended the wind production tax credit for another year. The American Taxpayer Relief Act of 2012 was passed by Congress on January 1, 2013, and signed into law on January 2 by President Obama. Sounds good? Right, a $14.3 billion subsidy, right, mostly right.
The downside is that one year provides only a modicum of stability in an industry that now employs some 75,000 workers. Short extensions, while better than nothing, spell trouble for developers, with the oft-short and worse yet, uncertain, shelf life of incentives and tax credits. Fear of the PTC loss has stymied the wind industry for months as eligible projects had to have been completed by the end of 2012. With typical 18-month development cycles, frequent changes in the tax code are problematic. (Some analysts had projected an additional 54,000 jobs in the wind industry if a four-year tax extension was granted.)
The new extension defines eligible projects as those begun in calendar year 2013, a provision that could result in significant wind installations in 2014 and 2015. But barring another extension, uncertain at this time of course, another drop-off anticipated thereafter. The extension also applies to all U.S. wind projects that start construction in 2013. In addition to the PTC, the law also covers investment tax credits for community and offshore wind projects. The law also includes geothermal, biomass, and hydropower tax credits.
The law extends the biodiesel tax incentive for 2012 and 2013, which expired on December 31, 2011. The $1-per-gallon biodiesel tax incentive was first implemented in 2005. According to a study conducted by Cardno ENTRIX, the biofuel industry would support more than 112,000 jobs nationally in 2013 with the tax credit in place versus nearly 82,000 without it.
The measure also provides one-year tax credits for household energy-efficiency upgrades such as exterior windows, doors, and skylights; alternative-fuel-vehicle refueling stations; a $2,500 tax credit for two-wheeled or three-wheeled plug-in electric vehicles; construction of energy-efficient new homes; and the purchase of energy-efficient appliances.