THE LATEST short-term extension of a US wind tax credit risks creating a glut of capacity unless states ratchet up regional renewable power targets.
The US wind market has followed a boom-bust cycle because the main subsidy is usually only extended for a year or two, creating a surge to develop projects before the next expiry deadline, contributing to a record year in 2012.
The US industry has been driven by the federal wind power production tax credit (PTC) plus state-level targets for renewable power generation.
The tax incentive is a vital driver, illustrated by the rush of installations last year as a Jan 1 2013 expiry deadline loomed.
It works by providing a tax credit of 2.2 cents a kilowatt hour of power generation for the first 10 years of operation.
A one-year extension under the “fiscal cliff” budget legislation will spur a new rush, by supporting all construction started in 2013However utilities are in some cases already over-achieving against state renewable portfolio standards (RPS) which oblige utilities to supply renewables at a certain proportion of total sales or generating capacity. — Reuters