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United States

Tax credit renewal buys more time

As US lawmakers ended the year's final legislative session, they gave the US wind industry a Christmas gift: an extension of wind's federal Production Tax Credit (PTC) through December 31, 2008. Industry reaction is predictably pleased but still yearning for the long term policy that has so far eluded it in the US.

The PTC, which was previously scheduled to expire on December 31, 2007, provides wind plant owners with a $0.019/kWh tax credit for electricity generated over the first ten years of a project's operation. The extension retains the policy in its current form. The American Wind Energy Association's Jaime Steve finds it notable this is the first time Congress avoided waiting until just before an expiration date to extend the credit. "This is the earliest extension we've ever received," says Steve. "What's critical to the industry is the ability to plan ahead. This creates planning time early on. And there will be other bites at the apple for more time."

At least some industry members intend to take those bites. "PPM Energy continues to call upon Congress to extend the renewables PTC on a long term basis. A long term extension of the PTC will enable wind and other renewable energy developers to plan on a long term basis, which will reduce the cost of new renewable electric generation facilities, leading to substantial amounts of new generating capacity," says Jan Johnson from PPM Energy. FPL Energy's Steve Stengel echoes her comments, but points out that it does no more than allow FPL's wind business to continue along its current course.

From Suzlon Wind Energy, CEO Andris Cukurs calls the one year extension a "step in the right direction." He adds, "While this is good news we are still seeking a longer term, three to five year commitment that will give our industry the confidence for further investment in the US."

Cukurs says Suzlon supports an alternative policy to the PTC in the form of a national green power mandate, which would offer much needed longevity in the market place. November's Congressional elections spun political control over to Democrats who are considerably more supportive of such legislation. AWEA representatives still consider a long term extension of the PTC their major policy priority, but say the atmosphere for a national Renewables Portfolio Standard will improve under Democrat leadership.

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