WASHINGTON -- The wind-power industry is pushing to get its favorite federal subsidy extended amid concerns that the program's expiration next year could halt the expansion of the fastest-growing renewable electricity source in the U.S.
For nearly two decades, wind power has benefited from the production tax credit, a federal incentive providing 2.2 cents per kilowatt-hour to companies for new wind capacity for the first 10 years it's online. The industry says the credit has helped wind account for 35 percent of all new U.S. power capacity in the past four years while making the source cost-competitive with coal and natural gas.
With the credit set to expire after Dec. 31, 2012, expansion may slow if Congress doesn't approve an extension.
A recent report from IHS Emerging Energy Research, an independent research group, said expiration would cause wind-power installations to decrease from 5.6 gigawatts a year since 2005 to 2.3 gigawatts a year from 2013 to 2016 and leave wind vulnerable to competition from low natural-gas prices.
The wind-energy trade group wants Congress to extend the credit now and not wait until late next year. Rob Gramlich, senior vice president for public policy at the American Wind Energy Association, said uncertainty already has led some site developers and turbine-component makers to scale back their 2013 plans because they have to make business decisions now.
A bipartisan group of 24 governors in July called for extending the credit by up to seven years. Gramlich said he was optimistic that Congress would act because both parties like policies that provide tax relief to businesses without imposing mandates.
But Rep. Mike Pompeo, R-Kan., told his colleagues in a letter last week that he would introduce a bill to eliminate all energy tax credits, including the wind PTC. He called his bill "a reasonable approach to ending the decades-long practice of trying to pick winners and losers."
The industry, rushing to build while the credit is certain to be around, could add a record high 10.5 gigawatts in generating capacity next year, up from 6.5 gigawatts in 2011, the IHS report projects. The credit has temporarily lapsed in the past. Wind installations decreased 73 to 93 percent each of the three years the tax credit lapsed in the 2000s, according to the wind-energy group.
