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United States

Senator goes for ten year extension

The debate over the fate of the US wind production tax credit (PTC) has been launched again in Congress with Republican Senator Gordon Smith's introduction of a bill calling for a ten year extension.

"I believe that an extension of this length will provide stability to this important emerging energy sector," said Smith in introducing his legislation, which would push the PTC's expiry date to January 1, 2014. The current extension expires at the end of this year.

"For the past several years, we have provided short term extensions, sometimes retroactively, of this important tax incentive. The result has been that investors and utilities have been hesitant to commit the capital necessary to bring wind projects online," he added.

Representative George Nethercutt, a Republican from Washington state, has also announced plans to introduce a similar bill calling for a ten year extension in the House of Representatives.

The tax credit is an important element in the financing of new wind farms, accounting for as much as 30% of their value. The retroactive extension of the PTC last March, more than two months after the credit had expired, was a factor in the sharp drop in installed capacity during 2002 over the year before. Last year saw the installation of only 410 MW, compared to a record 1696 MW in 2001.

Smith, from Oregon, also blamed PTC uncertainty for the decision by Vestas to delay plans for a manufacturing facility in his home state. "The main reason given for putting on hold this facility was the failure of the Congress to clarify the production tax credit for wind energy." Smith's bill has been referred to the Senate Finance Committee, of which he is a member. He also serves on the Senate Energy and Natural Resources Committee.

The American Wind Energy Association praised Smith's bill for recognising the importance of a long term extension to stability in the US wind industry. Other bills advocating PTC extensions, as well as expansion of the tax credit to other renewable energy technologies such as solar and geothermal, are likely to appear soon, the association said.

The PTC has strong support from both Republicans and Democrats. An extension of the credit was included in both the House and Senate versions of last year's energy bill, which died when Congress could not reach final agreement on the total package before adjourning in December.

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