A federal incentive for wind energy that’s been a big factor in utility resource acquisitions appears headed for an extension.
The production tax credit for wind energy is scheduled to expire at the end of this year, but Congressional leaders have included a one-year extension in a budget agreement expected to pass this week, avoiding a government shutdown.
The PTC is a per-kilowatt-hour tax credit that pays out for the first 10 years of a turbine’s operation.
The credit was previously extended in late 2015 in a deal that gradually stepped down its value, depending on when a turbine qualified as “under construction.” Turbines qualifying in 2019 get 40 percent of the 2.5-cent value.
Under the new deal, the credit will be available to projects under construction before the end of next year. The law also requires projects to begin operation within certain parameters in order to qualify.
The tax break costs the federal government between $4 billion and $5 billion a year, according to the Joint Committee on Taxation.
The PTC was a key factor cited by PacifiCorp in making its $3.1 billion “Energy Vision 2020” project, now under way, a benefit for ratepayers. The utility also proposed more wind power in its most recent resource plan, noting that “timing of construction is driven by the phase-out schedule of federal production tax credits, particularly the 2023 in-service requirements for 40 percent PTC eligibility.”
Portland General Electric also justified pushing ahead quickly to develop wind power in Eastern Oregon because the PTC would yield savings for ratepayers.
In both cases, the utilities were able to make investments in the projects several years ago, allowing the projects to qualify for the PTC’s full value.
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The wind industry and backers pushed desperately for an extension in 2015, and suggested that further extensions might not be necessary. The effort was tamer this year, in part because wind can now, in many circumstances, compete with other energy resources.