Wind energy tax credit likely over, but effect may not hurt like before

Dec. 31 is a curious date for Texas wind energy producers.

That's when transmission services providers expect to energize the last power lines built under the state's $7 billion Competitive Renewable Energy Zone initiative, the long-running effort to connect windy West Texas to the state's energy-thirsty big cities. The 3,600-mile project has been credited with spurring even more investment in Texas, the country's wind power leader.

But 2013's last day is also an ominous one for wind folks. It's the expiration date of the federal Renewable Electricity Production Tax Credit, the fate of which has driven booms and busts in the industry. The multibillion-dollar credit, which Congress passed in 1992, helps wind stay economically competitive with other energy sources, including low-priced natural gas. Without it, the industry can't keep pace, even as production costs fall.

Last year, as the credit neared its demise, Congress extended it as a part of a last-minute budget package, but only for a year. This year, with Congress focused on finding a way to turn the government back on and pay its bills, lawmakers have yet to draw up a proposal for the credit, making a swift renewal increasingly unlikely.

So how would Texas wind power fare if the 2.3-cent-per-kilowatt-hour incentive lapsed? That would depend on how long the credit is unavailable, observers say. But for a couple of reasons, the effect probably won't be as harsh as in past uncertain times.

Jeff Clark, executive director of the Austin-based Wind Coalition, said he's not too worried about the ticking clock. “There's a lot of projects in the pipeline right now,” he said.

The 202-megawatt Baffin Wind Farm, in Kenedy County, is one project that's depending on the tax credit. However, owner and developer Iberdrola Renewables LLC isn't concerned.

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