10 Responses to Harry Reid: I’m ‘Not Confident’ Congress Can Extend the Production Tax Credit for Wind
Senate Majority Leader Harry Reid said he’s “not confident” that Congress will be able to extend the production tax credit (PTC) for the wind industry this year.
In an interview with Climate Progress, Senator Reid (D-NV) lamented the breakdown of bi-partisan support for renewable energy, saying many conservative members of Congress were “making a concerted effort to thwart development” of clean energy.
When asked whether Congress would be able to pass even the most basic support mechanisms for renewable energy like the PTC, Reid answered: “I’m hopeful, but not confident we can get them passed.”
The PTC, which provides wind project owners 2.1 cents per kilowatt-hour of electricity produced, is a fundamental incentive for the industry. However, unlike permanent credits embedded in the tax code for oil and gas producers, the PTC is only extended every couple of years. That creates immense uncertainty in the sector in the lead-up to the expiration.
If the PTC expires, the wind industry would see a massive decline in installations, effectively choking one of the fastest-growing energy sectors in the country. During previous lapses in the tax credit, national installations fell by between 70% and 90%.
The PTC is set to expire at the end of 2012. Because it can take years to plan large wind farms, many projects are delayed or abandoned if a developer is unsure about completing the facility in time to qualify for tax credits.
Since 2009, wind developers have been able to take an investment tax credit worth 30% of a project’s cost or an equivalent 30% cash grant through the Treasury, rather than the PTC. The Treasury Grant Program has been immensely helpful to the wind industry at a time when tax equity investors (financial institutions that owe enough in taxes to acquire the credits and help fund projects) have been limited.
After a drop-off in installations in 2009 because of the financial crisis and stiff competition with cheap natural gas, the industry is rebounding. In the first half of 2011, developers doubled the amount of capacity that they put online in the first half of 2010.
But with the Treasury grant program set to expire in January and the PTC only around for another year, the wind industry is approaching the edge of a cliff.
Other industries that rely on the PTC like geothermal, biomass and hydro won’t face expiration until the end of 2013. But they too could be in a similar situation if no extension is in place before then.
It’s an all-too-common story for a sector that must deal with on-again, off-again support.
Reid said earlier this summer that any jobs package pushed by Democrats would focus heavily on clean energy jobs. And in his speeches at last week’s National Clean Energy Summit in Las Vegas, he was bullish about the long-term prospects for renewable energy in the U.S.
But off the stage, Reid was a lot more realistic about the fight within Congress over industry support.
“I would like to say we’re off and running and going to do all these great things. We’re going to try to do them. And I want to do them. But anything that we’re being asked to do is going to be hard to do.”