An initial legislative package from the US House of Representatives that includes a three year extension of the PTC beyond the end of 2009 is described as "very good" by AWEA's Greg Wetstone. For wind farm investors this year, the current PTC is worth about $0.021/kWh in reduced taxes. The package also includes a grant program offered as an alternative to the PTC. It would effectively allow new owners of wind plant to take a 30% investment credit based on the total capital cost of the wind project.
Not in the plan, but lobbied for by AWEA, is a direct purchase price subsidy the association calls PTC "refundability." The subsidy may yet work its way into legislation. AWEA's proposal is for a government bonus with the same value as the PTC for each kWh produced. It argues that both means of support come from government coffers, one in the form of lost tax revenues and the other in the form of taxes spent, but the latter does not require finding investors with substantial tax bills to offset.
The economic recession has reduced the pool of companies able to use the PTC. At the of end 2007, there were about 15 so-called tax equity players -- companies that make their living from something other than producing electricity -- regularly taking ownership positions in wind farms, partly as a way to use the PTC against their tax liabilities. More recently the number was closer to five, according to Edward Zaelke of law firm Chadbourne & Parke.
Sentiment in the wind industry ranges from those saying it is impossible to raise tax equity to others who feel there is plenty of money in the wings. "The industry is in crisis mode like I've never seen," according to John Calaway of independent wind power producer Babcock & Brown. At the other end of the spectrum, Ed Einowski of law firm Stoel Rives comments: "What you've got at the moment is people sitting on the sidelines and those who still have substantial capital are uncertain of where to invest it." Denise Bode, executive director of AWEA, warns that a 50% cut in new installations could be seen in 2009 compared with 2008's record level.
The Obama administration has expressed strong desire to support the wind power market, but ultimately both sides of Congress must agree to new laws. "There's a history of the House and Senate approaching things very differently, and the really hard task is getting them on the same page, even when they're both trying to be helpful," says Wetstone. "We certainly hope in this climate, with the new president, this job will be easier."