8:39am

Thu January 3, 2013
Energy

Extension of wind energy production tax credit likely to trigger rush on components

Wind turbines at Marble River in Clinton, NY
Credit Sarah Harris / NCPR

The last-minute fiscal cliff deal brought good news for the wind industry. Congress agreed to extend production tax credits for wind energy producers until the end of 2013.

 In 2012, wind projects could only qualify for the production tax credit if they’d finished construction and started producing energy. But this year, projects will be eligible for the tax break simply by starting construction.They don’t have to be finished by the end of the year to earn the credit. Peter Kelley is the spokesperson for the American Wind Energy Association, an industry group. 

"That's critically important because as the year wore on we’ve had layoffs at factories and we’ve had construction and development companies start to have to layoffs as well 'cause they just didn’t have any orders for 2013," Kelley says. "But a plain one-year extension wouldn’t do much 'cause it takes about 18 months to 24 months to put up a wind farm." 

Stephen Bird teaches energy policy at Clarkson University. He says the new tax credit likely means that wind development in [regions like] the North Country will continue.

"At a minimum for projects in the pipeline – I would expect to see those folks push through very hard to get to a point where they can have a project at least started." 

But with everybody rushing to start construction all at once, Bird anticipates a run on supplies and components.

"What you’ll see is a huge rush and quite possibly a backlog on turbine parts from both international and national suppliers," he says. 

Under the production tax credit, wind energy producers receive 2.2 cents per kilowatt hour of energy produced at an estimated cost of $12.1 billion over ten years.