United States

United States

Air of desperation in the wind lobby

As the nation's legislators prepare to end their annual session in October, the future of the Production Tax Credit (PTC) is uncertain--if no extension is passed, the $0.015/kWh credit for wind energy will expire in mid 1999. The American Wind Energy Association is valiantly trying to weight the scales in favour of wind by drumming up optimism among wind's backers.

The short term outlook for wind in America is hanging in the balance this month as the nation's legislators prepare to end their annual session on October 10. Meantime, the American Wind Energy Association (AWEA) is valiantly trying to weight the scales in favour of wind by drumming up optimism among wind's backers.

The future of the all important Production Tax Credit (PTC) is uncertain -- if no extension is passed, the $0.015/kWh credit will expire in mid 1999. According to AWEA, wind's strong support on Capitol Hill should mean the PTC is more than 50% likely to be extended for a full five years. The optimism is pinned on a strategy to attach the PTC as a last minute addition to the 1998 tax bill. But, as Bill Adams of wind developer Whitewater Energy Corp laments: "The problem is, is there going to be a tax bill and will Clinton sign it?"

The US Congress is struggling to avoid a partial government shut down akin to that in 1995 as Bill Clinton threatens to veto most of the current drafts of "appropriations bills" this session. Two of those he is against include anti environmental policies that are anathema to the green friendly White House.

Even if there is a tax bill, it is not at all clear that PTC extension will be five years. The cost of the credit is an issue. Congress says it will cost $144 million over five years, an estimate about three times as high as AWEA's. There is a real possibility the PTC might only be extended for one year at a time. The year by year scenario is more than 50% likely, admits AWEA's main lobbyist Jaime Steve. Not long ago, AWEA director Randy Swisher referred to the annual extension option as "slow death" as there is no long term market stability.

There are also fears that wind plant repowering might be treated differently than new plant, an idea backed by California's major private utilities to cut their renewables costs. "I'm not saying that's a disaster, but the clean-up of California will definitely be very negatively affected," comments Niels Rydder of M&N Wind Power in San Diego. "If you're not in the middle of a project now, it's too late."

RPS in limbo

Farthest out on the legislation horizon is the Renewables Portfolio Standard (RPS), a market mechanism promoted by AWEA for a standard amount of renewables in the supply mix of a deregulated market. AWEA staff are especially vague about the outlook for an RPS in national restructuring legislation. "No-one really knows the likelihood of it passing next year," says AWEA's Michelle Montague. Powerful Republican Senator Steve Largent has warned that no such proposal would be included in a restructuring bill next legislative session because of its mandatory nature. It seems the RPS will be dependent on the make-up of congress after the elections in November.

The only certainty for wind is an R&D budget. The outlook is guardedly optimistic. The amount earmarked for next fiscal year, FY99 , will be between $33.5 million and $38 million, compared to this fiscal year's spending level of $33 million. That means the final amount will be less than the amount proposed by the White House, which has also backed the five year PTC extension. Early in the year, Clinton had proposed upping the FY99 wind budget to $43.5 million.

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