The sweeping $1.1 trillion spending bill Congress approved earlier this month includes an extension of tax credits that will benefit the wind industry for the next five years.
Proponents, including developers of the Buckeye Wind Project in Champaign County, praised the extension of the Production Tax Credit, arguing it will secure tens of thousands of jobs and provide stability to build new projects over the next several years.
However critics described the extension as a waste of taxpayer money that will do little to reduce carbon emissions in the long run.
“This five-year extension helps tremendously,” said Mike Speerschneider, chief permitting and public policy officer at Everpower Wind Holdings. “It gives us a bit more of a planning horizon and will allow us to be efficient and strategic about all of our investment decisions, including Buckeye. Overall it’s really a welcome situation in terms of a longer-term extension.”
Everpower plans to develop two wind farms in Champaign County that could install more than 100 wind turbines across several townships.
The federal tax credit allows developers to claim a tax credit of 2.3 cents for each kilowatt-hour of electricity produced by a wind project.
Those credits were allowed to expire at the end of 2014, but Republicans agreed to include the credits for wind and solar development in exchange for the federal government lifting a decades-long ban on exporting U.S. crude oil. The credits will be extended for 2015 and 2016, and will then be phased out over the next several years. It will offer 80 percent of the credit in 2017, 60 percent in 2018 and 40 percent in 2019.
Wind projects will qualify for the tax credits as long as construction begins during that period.
The tax credits were meant to provide incentives to the wind industry until it could compete with other energy sources, said Robert Bryce, a senior fellow with the Manhattan Institute, a conservative New York think tank. Despite receiving the credits for years, he said the industry still isn’t competitive.
“They can’t operate alone,” Bryce said of wind projects. “The wind energy business is the electric sector’s equivalent of corn ethanol in that they need mandates and or subsidies to survive.”
The wind industry industry is receiving push-back in several states, Bryce said, often from neighboring residents who don’t want to live near the turbines. The tax credits are inefficient in part because the wind farms cannot operate around the clock to reliably provide energy when needed, he said.
“This isn’t an energy source that you can depend on solely,” Bryce said. “You have to blend the electricity produced with wind with that produced with natural gas or coal or nuclear.”
Information from the American Wind Energy Association argued the federal tax credits have spurred investment in the industry, helping support more than 70,000 U.S. jobs and making the energy produced more affordable. Information from the association argued the cost to produce wind energy has fallen 66 percent in the past six years.
The Buckeye wind projects in Champaign County are still tied up in the courts. The projects’s developers and opponents recently argued before the Ohio Supreme Court over whether the second phase of the project should be allowed to move forward. A decision in that case isn’t expected for several months.
Several residents who live near the proposed turbines have opposed the project, citing concerns with how close the wind mills are to their homes and the possible affect on property values.
Everpower wants to begin construction on both phases of the Champaign County wind farm next year, but an 80 percent tax credit would still be valuable if construction begins in 2017, Speerschneider said.
“It’s hard to say right now,” Speerschneider said. “We’re doing everything we can to push the project to be able to put it into construction, so obviously PTC or not, we’d like to do it in 2016. We’re certainly striving to do that.”
The biggest benefit of the credits is it provides stability for the industry moving forward, he said.
“It’s good to have a horizon we can plan with and hopefully help us get things done in the most efficient way possible,” Speerschneider said.