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United States

Sequestration forces US wind grant cuts

UNITED STATES: Cash grants to US wind energy projects will face an 8.7% cut after US lawmakers failed to resolve their budget differences before their self-imposed 1 March deadline.

US Treasury... failed to reach agreement before 1 March deadline
US Treasury... failed to reach agreement before 1 March deadline

The automatic across-the-board spending cuts, known as sequestration, are designed to save $85 billion between now and the end of the federal government's budget year on September 30.

Any renewable energy project that did not get its cash grant application approved before Friday's cutoff will be subject to the reduction, the US Treasury Department stated on its website.

The grant, implemented in 2009 as a way to overcome financing roadblocks in the wake of the financial crisis and is equivalent to 30% of eligible project costs.

Wind energy projects that started construction before the end of 2011 and came into service by the end of last year are eligible to receive it, but just how many applications are still being processed is not clear.

The American Wind Energy Association (AWEA) was unclear how it could affect the wind sector. In a statement, AWEA said: "We are still digesting Treasury's short statement on how sequestration will be applied to this programme, and, therefore, don't have a full view on its potential impact."

Experts have warned that a grant reduction could have significant implications for developers who counted on the full amount in the financing of their projects.

The industry had been lobbying the government in an effort to stave off the cuts to wind projects, arguing that because they came into service before sequestration they should not be subject to it.

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