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United States

Tax credit progress dangerously slow -- Senate approval just one step

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The US Senate may have passed a three-year extension of wind's federal production tax credit (PTC), but the slow legislative pace means there will be little to no growth in installed wind capacity this year, says the American Wind Energy Association (AWEA).

The Senate extension, which would see the PTC remain in place until the end of 2006, was part of a $13 billion package of energy tax breaks and financial incentives approved on May 11. The incentives were stripped out of a broad-ranging energy bill that has been stalled since the fall and attached to an unrelated corporate tax bill designed to end a trade dispute with Europe, which passed in a 92-5 vote. An attempt to delete a raft of energy provisions from the tax bill was overwhelmingly defeated.

Although Senate passage is a big step forward for the PTC, a number of hurdles remain. "Final action still requires House passage of a similar bill, a conference committee to hammer out differences between House and Senate versions of the bill, and one last vote in the House and Senate to approve the compromise bill before it would be ready for the president to sign into law," says AWEA's Jaime Steve.

Meantime, says AWEA, the number of planned wind installations for 2004 is dropping. It predicts there will be less than 500 MW of new development this year, saying developers need at least six months of lead time to obtains permits and arrange financing and project construction. "The longer an extension is delayed, the less likely a project can be completed before year's end," says AWEA.

The inconsistency of federal financial support has become disturbingly familiar for the US wind industry. This latest bust follows a near-record 1687 MW of new installations in 2003. And it has happened twice before. Installed capacity in 2000 dropped to 53 MW after the PTC expired in June 1999. When it expired in 2001 and was not extended until March 2002, installed capacity plummeted from a record 1695 MW to just 410 MW.

"A wide range of US companies are interested in the wind industry, but many are staying on the sidelines because of the on-again, off-again nature of the market produced by frequent expirations of the PTC," says AWEA executive director Randy Swisher.

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