Bill to Extend Renewable Energy Tax Credits Introduced
A bill introduced in the House today would extend vital tax credits for the renewable energy industry that are about to expire.
Historically, lenders tend to pull back 6-8 months before tax credits expire because of the uncertainty of whether they will be renewed.
Reps Dave Reichert (R-WA) and Earl Blumenauer (D-OR) introduced the American Renewable Energy Production Tax Credit Extension Act (H.R. 3307), which would extend tax credits for the production of all forms of renewable energy - wind, geothermal, hydro, landfill gas and biomass - through 2016 (solar tax credits don't expire until then, which is why it isn't included).
The Production Tax Credit (PTC) is a tax incentive that helps energy developers raise private funds to bring renewable energy projects to completion. Private investment in wind energy over the last four years of relative PTC stability averages $17 billion a year, for example.
The Congressional Research Service, a nonpartisan agency that provides policy research for Congress, recently warned against letting the incentives expire, noting the negative impact of the boom-and-bust cycles in renewable energy investment.
They were referring to the wind industry, but the same is true for other renewable energies. We use the wind industry as an example.
Because of long lead times, wind project developers are already becoming hesitant to invest in future projects and American manufacturers are already seeing a marked decrease in orders. In the past, when the wind PTC was allowed to expire, installations dropped 73%- 93%, resulting in significant job losses.
"Extending this long-standing tax incentive will leverage private investment to bring proven energy projects online, bolster domestic manufacturing, and reduce electricity costs for businesses and families," says Rep. Reichert. "Renewable energy resources play an important and increasing role in America's total energy supply and reducing our reliance on foreign energy resources controlled by hostile nations. The certainty this bipartisan bill will provide can further spur growth in this vital sector, increase economic development, and create jobs."
"The recent stability of production tax credit (PTC) has provided the foundation of wind energy's transformation of a new manufacturing sector. Over the last six years, U.S. domestic production of wind turbine components has grown 12-fold to more than 400 facilities in 43 states. Extending the PTC will keep growing U.S. wind energy manufacturing jobs, rather than losing them to other countries," says Denise Bode, CEO of the American Wind Energy Association (AWEA).
Another bill (H.R. 3238) seeks to jumpstart the offshore wind industry by extending the Investment Tax Credit (ITC) - which cuts project costs 30% - for the first 3000 MW of projects. Introduced by Reps Pascrell (D-NJ) and LoBiondo (R-NJ), there's also a companion bill in the Senate (S. 1397) sponsored by Sen. Carper (D-DE) and Snowe (R-ME).
The U.S. wind industry installed just over 1,200 MW in the third quarter, up from 671 MW in Q3 2010. 3,360 MW has been added year- to- date, and there's another 8400 MW under construction, says AWEA, amounting to $20 billion in annual investment.
Many leading wind developers say they have no projects scheduled for 2013, which is starting to threaten both development companies and the U.S. wind supply chain.
Turbines prices have been dropping rapidly and costs are very close to fossil fuels.
The amount of wind installed in North America could double over the next six years - from 53,000 megawatts (MW) in 2011 to 126,000 MW by 2017 if the PTC is renewed.