Rep. Mike Fitzpatrick, R-Pa., has introduced H.R.2987, the PTC Certainty and Phase-Out Act of 2013, which would extend the production tax credit (PTC) for six years before completely phasing it out.
According to Fitzpatrick, who introduced the bill into the House before Congress dismissed for the August recess, the bill would provide the business certainty that wind developers and suppliers need.
“This bill gives wind energy producers a six-year window to make this alternative form of energy work on market-based principles,” says Fitzpatrick. “The phase-out strategy outlined in this bill can be a model for similar tax credits to provide entrepreneurs with a level playing field while giving these companies the opportunity to innovate and plan for success.”
The federal PTC for wind expires at the end of this year. However, a change in the rules, added during the last extension, requires developers to show that project construction in 2013 demonstrates “significant work of a physical nature” and shows that 5% of their costs have been incurred.
Congress amended the language to allow any project that starts construction in 2013 to qualify for the PTC, rather than require the project to be fully completed. Congress tweaked the rule to allow developers to maximize the tax incentive.
Fitzpatrick notes the last-minute approach to the previous PTC extension has resulted in thousands of layoffs. Langhorne, Pa.-based turbine maker Gamesa, which is part of Fitzpatrick’s Bucks County district, has been particularly hard hit by PTC uncertainty.
“This boom-bust cycle has kept the industry in a state of perpetual uncertainty,” says David Flitterman, Gamesa’s North American chairman, adding that with stable policy, manufacturers are able to invest in research and development that can drive down the cost of energy.
“Under Fitzpatrick’s bill, that downward trend would continue, enabling the industry to reach grid parity by the time the PTC phases out,” says Flitterman. “His legislation provides the certainty manufacturers need to make these long-term investments.”
Given the full docket facing legislators this fall, such as debt ceiling and tax reform negotiations, the long-term prospects are unclear for the stand-alone bill in a divided Congress.
In a statement, the American Wind Energy Association says Fitzpatrick’s legislation, if part of a comprehensive tax reform bill, “could provide the wind industry with much needed predictability and allow for longer-term planning and investment into future U.S. projects.”
AWEA To Tie PTC
To Tax Reform Talks
The American Wind Energy Association (AWEA) will be looking to include an extension of the PTC as part of upcoming Capitol Hill discussions on tax reform. Tom Kiernan, the association’s CEO, revealed the plans at the 10th Annual American Renewable Energy Day (AREDay), recently held in Aspen, Colo.
Appearing on a panel with Susan Reilly, CEO at RES Americas, and Susan Innis, senior manager of public affairs at Vestas, Kiernan highlighted for attendees the extraordinary success the U.S. wind industry experienced in 2012, a record-breaking year that included more than 13 GW in installed capacity.
However, to underscore the point that wind energy needs policy stability to flourish, Kiernan noted that the U.S. wind industry has dropped to just 1.1 GW of projects under construction through the second quarter due to uncertainty.
He said that the key challenge was the unpredictable political environment and that policymakers “need to enable the industry to reach its full potential” by creating stable policy.
Kiernan emphasized that wind in the long term is going to be successful, and the industry needs to build the bridge with the appropriate policies – including the PTC – and look to public utility commissions to appropriately value all energy forms.
Following the panel discussion, Kiernan told NAW that preliminary discussions are under way on Capitol Hill to address comprehensive tax reform. As a result, AWEA is focusing on the tax reform process, since it is going to be tough to get an extenders package while tax reform is active and being discussed. Kiernan stated that working through extenders is still on the table but that tax reform is the option at this point.
Last year, AWEA employed a similar strategy and decided the best chance to extend the PTC was to attach it to a larger bill to ride through Congress.
Kiernan also reiterated that the industry would be willing to consider responsibly phasing out the PTC through comprehensive tax reform, so long as all other energy industries are at the table.
But he added that it is the industry’s position that it should not prematurely sunset clean energy tax credits, as that would destroy investment-backed expectations for many projects currently being planned and, in turn, destabilize already fragile markets.
Citing the stand-alone PTC bill that was recently introduced by Rep. Mike Fitzpatrick, R-Pa., Kiernan said he is enthusiastic about the bipartisan support the wind industry receives. He also said he is encouraged by the industry’s efforts to defend attempts in several states to roll back renewable portfolio standards (RPS). “The fact that every state rebutted RPS rollback efforts shows the strong support the industry has.”
He added that he looks forward to continuing to defend against the RPS-rollback efforts where needed and targeting opportunities to strengthen RPS policies.
In his final comments, he stressed the importance of working with the Environmental Protection Agency and states to address rules on existing power plants, noting these efforts will enhance the market position of wind. Kiernan seemed confident that while the industry faces challenges, there is bipartisan support on the local, state and national levels that is encouraging, and the industry has a bright outlook.
The AREDay conference, which also featured keynotes such as Ted Turner, T. Boone Pickens and General Wesley Clark, attracts individuals from both the public and private sectors, including international renewable energy experts, investors, entrepreneurs, industry experts and nonprofit leaders.
Richard Krauze is a veteran wind industry executive based in Denver. He can be reached at email@example.com. w
PTC Extension Bill Introduced
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