Experts have warned that wind developers will head to the state with the most attractive players - that now could be Washington.
In Oregon, the controversial Business Energy Tax Credit (BETC) has been criticised as an unrestrained giveaway to renewables projects that would have been built even without it, and for funnelling tens of millions of dollars to out-of-state companies through loopholes and inadequate oversight.
State legislators finalised work in February on legislation to cap the credits at $450 million through mid-2012, nearly $150 million less than had been forecast by revenue officials. "I think everyone would agree that the controls the energy office had on the programme were not as they should be," says Rachel Shimshak, director of Renewable Northwest Project, a regional advocacy group. "It would have been worse not to address the issues that were raised by the programme."
The new law caps credits for wind projects greater than 10MW at $3.5 million in 2010, $2.5 million in 2011 and $1.5 million in 2012. The state energy department has been granted more power to prioritise and evaluate applications. The caps are not retrospective. Previously, BETC allowed 50% credits for eligible project costs up to $20 million - making wind farms eligible for $10 million. "The BETC did encourage enormous growth in wind power here in Oregon," says Jan Johnson, spokeswoman for the Oregon-based US division of Spanish utility Iberdrola. "I think there will be less development without it."
Oregon's renewable energy standard requires 25% of its electricity from clean sources by 2025, while Washington requires 15% by 2020. California, scrambling to meet its own renewables mandate, imports green power from both states, which had combined installed wind power capacity of 3.7GW by 2009.
The BETC revisions, intended to rein in short-term costs as part of an emergency session, are expected to be revisited by state legislators during their next regular session in 2011. "It wasn't the most beautiful process," says Shimshak. "But the programme is still quite substantial and provides a lot of support for clean energy resources across the spectrum."
Meanwhile, state lawmakers in Washington failed last month to inject wording into the state budget legislation that would have limited sales tax exemptions on wind energy equipment. Had it done so, the new law would have rendered such equipment purchases eligible only if the resulting electricity was sold to, or projects were owned by, in-state utilities.
The state's wind industry opposed the proposals because they unfairly singled out the wind industry. But supporters had countered that the restriction could have helped close the state's budget gap, even if courts later ordered tax refunds for wind projects.
"Whichever states manage their budgets so that they keep or create incentives for wind power," says Johnson, "those will probably be the states that get more wind power development."