Republican senators blocked the bill, in a 53-40 vote, in a protest over amendments. It needed 60 votes to proceed.
The bill would extend the PTC to projects that start construction before the end of 2015. It also extends the ability of developers to opt for a 30% investment tax credit instead of the PTC.
The bill has cross-party support, but the Republicans are angry that the Senate majority leader, Democrat Harry Reid, is not allowing Republican senators to offer amendments to the bill.
Chairman of the Senate Finance Committee, Ron Wyden, said he hopes to reintroduce the bill on to the Senate floor by next week. The committee approved the extension in April.
At last week's American Wind Energy Association (AWEA) annual conference in Las Vegas, CEO Tom Kiernan said the industry was optimistic the bill would pass.
"We've got a lot of Democratic champions, we have some important Republican champions, so we think we've got well over the minimum 60 votes needed to get it passed," Kiernan said last week.