Extended U.S. Tax Credit Blows Fresh Air Into Wind Projects

Wind-farm construction in the U.S. nearly ground to a halt after ending in a frenzy late last year. But the pace of turbine installation is set to pick up substantially later this year, largely thanks to the recently enacted extension of the federal production tax credit, say utility and wind-sector experts.

Frank Maisano, an energy specialist at Bracewell & Giuliani, a law firm in Washington, D.C., with renewable-energy clients, says that, with so much uncertainty about extending the credit beyond 2012, many developers rushed to finish projects by year-end. The American Wind Energy Association says wind-turbine contractors brought on line a record 13,124 MW of wind capacity in 2012, including 8,380 MW in the last three months.

Tim Maag, vice president and general manager at Mortenson Construction, saw a big drop-off in wind-farm work for the first half of 2013. "Due to the fact that the extension took so long to get passed, most of our customers had put their construction plans on hold, which was expected," he says, adding that work in the third and fourth quarters will be "very robust." Says Maag, "We have responded to numerous RFPs and pricing requests since the beginning of the year."

The tax-credit extension approved by Congress and signed by President Obama in January as part of the "fiscal cliff" compromise provides a $22/MWH tax credit for the first 10 years of a wind farm's operation. For the first time, the latest extension applies to all projects under construction by Dec. 31, 2013, even if they are not completed until next year. Under the previous tax credit, a wind farm had to be completed and operational by the end of 2012 to qualify.

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