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United States

Oklahoma to cut tax credit four years early

UNITED STATES: Oklahoma governor Mary Fallin has signed legislation to end the state's $0.005/kWh tax credit for wind.

Duke Energy Renewable's Frontier I project — II and III are in early development and will miss the tax credit
Duke Energy Renewable's Frontier I project — II and III are in early development and will miss the tax credit

Oklahoma projects must be online by 1 July to be eligible. Previously, the tax was due to end in 2021. The credit is worth $0.005/kWh for ten years.

The state had become a magnet for wind projects because of the credit and its strong winds.

Oklahoma is the US's third-ranked state, with more than 6.6GW of installed wind capacity. Last year, some 25% of Oklahoma's electricity was wind power.

"This seems fairly short-sighted, given the jobs, property taxes and ground rent to landowners," said David Burton, head of law firm Mayer Brown's renewable energy group in New York.

He knows of "several" cases of developers no longer considering Oklahoma for projects because they foresaw the credit's demise.

Those who favoured ending the credit say it was necessary to address Oklahoma's budget crisis.

More wind projects have been built than expected when the credit was introduced in 2010, noted Burton.

PNE Wind USA's 200MW Chilocco project is under construction in Oklahoma and set to be commissioned by year-end 2018.

"This [end of the credit] has been on the radar for at least a couple of years," said the company's lead developer, Art Roden. PNE had already taken the credit out of the project financials.

Duke Energy Renewables' Frontier II and III projects, which total 352MW, are in early development.

A Duke spokeswoman said most of the wind industry recognised the state's financial crisis, but expected more notice.

"This is a little bit of a surprise," she said. "Everyone was hoping to have it [end] perhaps at the end of 2018, so they could get any project under construction under the finish line."

Oklahoma paid out nearly $60 million in wind tax rebates in 2014, according to the Oklahoma Tax Commission, up from $18 million in 2012.

Low taxes on the state's oil and gas industry were worth $470 million in fiscal year 2015 alone, Reuters reported.

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