Congress built a rope bridge across the so-called "fiscal cliff" with a tax hike for rich people, thus ending the most recent ridiculous debacle that highlights the devastating dysfunction of the modern American political system. For about two months.
But while all the headlines hone in on that dysfunction, or the first bump in the tax code in decades, there is, oddly, some fantastic news for the clean energy industry hidden away in the fiscal cliff correction deal. That's why I got a press release from the American Wind Energy Association at 8 pm on New Year's Day (no relaxing or barbecuing for renewable energy advocates): an all-important tax credit was not only extended but improved as part of the bargain.
Congress has included the long-sought extension of wind energy tax credits in final passage of a bill to avert the “fiscal cliff” that now moves to President Obama for his expected signature.
America’s 75,000 workers in wind energy are celebrating tonight over the continuation of policies expected to save up to 37,000 jobs and create far more over time ...
See, the Production Tax Credit (PTC), which offers wind power producers 2.2 cents per kilowatt hour of electricity generated, had technically expired last Thursday. But a one-year extension of the cuts made it through the Senate Finance Committee and into the final deal, with one important tweak: the tax credit now applies to any wind power project that begins construction in 2013. Not just those that get completed.
Which means that anyone with any interest in building wind plants has a newfangled incentive to do so ASAP. In 2013. It means that we're likely to see a major surge in wind construction this year, as producers push to secure their incentive in a political climate that continues to be maddeningly uncertain. Grist's David Roberts notes that the new and improved PTC will end up turning 2013 into a "boom year" for wind.
It allows projects to be built (and financed) over longer periods of time without worrying about losing the tax incentive. I’ve heard informal estimates that one year of this kind of PTC is worth two or three years of the conventional PTC …
This means wind developers can lock in PTC money if they break ground in 2013, but it’s highly uncertain whether that money will be available in 2014. That adds up to a huge incentive to start projects this year.
It does indeed. If anything, we've learned from this never-ending string of gridlocked congressional showdowns and standoffs and cliffs and whatever that we can't count on Congress to look more than a few weeks down the road. Congress has been renewing the wind power tax credit (and others like it) at the last minute for years now; this extension was as down to the wire as you can possibly get. Who knows if they'll approve a credit at all next year.
As such, it's time for any interested party to double down on wind while the getting's good. There might not be a better time to build wind turbines, and the industry knows it. Expect to see turbines turning like there's no tomorrow by the end of 2013.