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United States

Election - Debate must go beyond tax credit issues

UNITED STATES: An extension to the production tax credit (PTC) would clearly please the industry, but many wind proponents are looking beyond this issue in their hopes for post-election energy policy.

There is no certainty of such an extension taking place - even if Democrat President Barack Obama is re-elected in November. Control of the House of Representatives is likely to remain in the hands of Republicans, who can block any efforts to extend the policy.

The industry is realistic about prospects for the PTC. Gary Hardke, CEO of California-based developer Cannon Power Group, said: "Probably the most we can hope for in the short run is another short-term continuation of the PTC - but maybe that's not even going to happen."

Investment tax credit

Many hope any PTC extension that does transpire includes an option for an investment tax credit (ITC), which would provide roughly 30% of the installed cost of projects. An ITC does not require the cumbersome tax-equity arrangement needed to realise the PTC's $0.022/kWh over the first ten years of a project.

"PTCs are proven to be a challenging way to incentivise the industry," Hardke said. "Finance people tell me an investment tax credit is easier to monetise than production tax credits."

Lisa Daniels, executive director of community-wind advocacy Windustry, believes an ITC would be of significant benefit to citizen-owned projects that have little appetite for the tax arrangements needed for the PTC. But Daniels would also like to see passage of the Community Wind Act, which takes an existing small-wind ITC for 100kW turbines and expands it to community projects up to 20MW. "The bill is a totally separate community-wind piece," she said. "And it lasts through 2016."

Wider discussion

Regardless of the outcome of the PTC debate, most industry players would like to see a broader conversation about energy.

"If you talk to your average American, they support renewable energy, and that support works its way through the political process," said Michael Skelly, CEO of transmission developer Clean Line Energy. "But part of it is these are big-boy problems - the wind industry grows up and you've got big projects that are more complicated and with bigger footprints. Some of this is just the signs of a maturing industry."

Yet Skelly laments the divisive nature of policy debates. "A partisan divide on wind energy isn't good for the country or the industry," he said. "If I could have a wish, it would be less partisanship and more frank discussion."

That is something all energy industries would welcome, according to Matt DePrato, a wind-energy analyst at IHS Emerging Energy Research. "They might not like the specifics of one administration or the other, DePrato said. "But I think long-term policy that lays out the operating environment for the next 10 to 20 years is very important."

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