On August 2, 2012, the Senate Finance Committee approved the Family and Business Tax Cut Certainty Act of 2012, which includes a one-year extension of the wind power production tax credit (PTC). The Obama administration is a strong supporter of the wind PTC, which is set to expire in December 2012. Conversely, the Romney campaign advocates ending the PTC to create a level playing field on which all energy sources have an equal competitive opportunity.
2.2¢ per Kwh
Under current law, taxpayers can claim a 2.2 cent per kilowatt hour tax credit for wind electricity produced for a 10-year period from a wind facility placed in service by the end of 2012.
According to the American Wind Energy Association (AWEA), the PTC is an effective tool to keep electricity rates low and to encourage development of proven renewable energy projects. “Equipped with the PTC, the wind industry has been able to lower the cost of wind power by more than 90 percent, provide power to the equivalent of over 12 million American homes, and foster economic development in all 50 states,” says AWEA. Other benefits associated with the wind PTC include nearly 500 facilities across 44 states manufacturing components for the wind energy industry; 60 percent of a wind turbine’s value now produced in American companies compared to 25 percent before 2005; and an average annual private investment of $15 billion over the past 5 years.
Project uncertainty
The potential termination of the PTC has slowed or stopped plans by project developers and has stalled orders to American manufacturers. Concern about the economic fallout from ending the PTC was voiced in a letter to the Finance Committee by a bipartisan group of six senators, who noted that the PTCs pending expiration is causing uncertainty across the wind industry and threatening the stability of 37,000 jobs nationwide.
The United States generated 2.9 percent of its electricity from clean wind energy in 2011. In Iowa and South Dakota, wind now generates about 20 percent of the states’ electricity needs. The U.S. Energy Information Administration believes that the nation as a whole can derive 20 percent of its power from wind by 2030, but that will happen only with massive backing from the federal government.
A spokesperson for the Romney campaign said that wind energy should be allowed to sink or swim based purely on its merits.