Graph of the Day: Wind Production Tax Credit

One of the most important spurs to the spectacular growth of the American Wind  industry (a third of all new electric capacity in the U.S. over the past four years) has been the Production Tax Credit – a subsidy meant to help level the playing field for the developing renewable industry against the entrenched and overwhelmingly subsidized old energy/fossil fuel sectors.  The PTC has a history of being a political football, and the growth of the industry shows exactly how, when the credit has periodically been allowed to expire, wind installations suffer, dropping between 73 and 93 percent. The current PTC is scheduled to expire in 2012, and wind developers are rushing to install capacity in anticipation that the law will, once again, be allowed to lapse.

Business needs predictability. PTC has been the tool that provides that for the wind industry, at least until we can get to a national Renewable Portfolio Standard, or Feed in Tariff.

New Energy News:

“U.S. Representatives Dave Reichert (R-WA) and Earl Blumenauer (D-OR), members of the tax-writing House Committee on Ways and Means, today introduced the American Renewable Energy Production Tax Credit Extension Act (H.R. 3307). This bipartisan bill extends the tax incentive for the production of wind power, geothermal power, hydropower, and other forms of renewable energy through 2016…

“H.R. 3307 provides a clean, 4-year extension of the existing production tax credit…It was created in the Energy Policy Act of 1992 and has frequently been extended in year-end packages of expiring tax provisions, as well as in the Energy Policy Act of 2005. The current incentive is set to expire next year for wind and in 2013 for other renewable energy forms…”

American Wind Energy Association:

Wind energy means 75,000 jobs across the U.S. today and could support 500,000 American jobs across the country in manufacturing, construction, engineering, development and other fields less than 20 years from now according to a U.S. Department of Energy study.
The recent stability of the Production Tax Credit has provided the foundation of wind energy’s transformation of a new manufacturing sector based on American ingenuity: wind has supplied more than a third of all new electric capacity in the U.S. over the past four years.

Surveys consistently show that Americans are overwhelmingly in favor of clean wind energy and the Made-in-the-USA jobs that it helps create. Wind energy received 89 percent public approval in a recent poll.”

About the Production Tax Credit:

The PTC is a tax incentive that helps energy developers raise private funds to bring renewable energy projects to completion. Private investment generated over the last four years of relative PTC stability averages $17 billion a year.

The wind energy PTC will expire in 2012 unless Congress takes action. Failure to extend the PTC will lead to job losses and will put the brakes on the progress we’ve made as a nation to include clean, affordable, homegrown energy as part of the U.S. electricity portfolio.

Facing the threat of the PTC expiring, wind project developers have become hesitant to plan future U.S. projects and American manufacturers have seen a marked decrease in orders. The wind industry is facing the recurrence of the boom-bust cycle it saw in previous years when the PTC was allowed to expire. In the years following expiration, installations dropped by between 73 and 93 percent, resulting in significant job losses.

As I recently reported, even self described conservatives like Kansas Governor Sam Brownback (R) strongly support extending the PTC for wind –

The wind industry has utilized a production tax credit, which has helped the industry see steady growth this decade. I support the continued use of those tools as a way to spur investment in our communities and create sorely needed jobs.
Wind energy makes a compelling economic case with new installed wind prices dropping from around 6 cents per kilowatt-hour to 3 cents per kilowatt-hour or lower, while turbine technology increases capacity factors to about 50 percent or more. We’ve increased transmission capacity, constructing more than 1,000 new miles of high-voltage electric transmission.

Iowa Governor Terry Branstad (R)-

The governor said the wind industry has helped revitalize rural areas and provided landowners with a significant new revenue source from lease payments of up to $120,000 over a 20-year period for each turbine installed on Iowa farms.

Branstad noted that recent polls showed that more than 80 percent of Iowans held a favorable view of wind energy, adding, “I’ve never gotten 80 percent of the vote, so I appreciate how significant those numbers are.”

In July, a bi-partisan group of 24 Governors from across the country wrote to President Obama in support of extending the PTC:

It is important to have consistency in policy to support the continued development of wind manufacturing in the United States. Extending the production tax credit and the investment tax credit, without a gap, is critical to the health of  wind manufacturing in our nation.

So called “free marketers”, (usually found suckling at the teat of the oil industry, which gorges at the public trough) will scream about competition, yada yada – but ask them to join in opposing subsidies to all energy sources, including oil and nuclear and you hear….crickets…

The video below was produced to be shown in and around the Iowa presidential straw poll in august.