By Jeff Postelwait
6 October 2008 — After some suspense in Washington concerning the economic rescue bill passed by the House October 3 and signed into law by President Bush, some power industry officials say that they are relieved and surprised that the production tax credit and investment tax credit extensions made it back into H.R. 1424.
The act extends the production tax credit placed-in-service sunset date for certain wind and refined coal facilities until December 31, 2009, and extends the PTC placed-in-service sunset date for certain other qualifying facilities until December 31, 2010.
The act also expands the PTC to include certain marine and hydrokinetic renewable energy facilities placed in service on or before December 31, 2011.
The act extends the ITC placed-in-service sunset date for solar, fuel cell and microturbine property until December 31, 2016 and expands the ITC to include combined heat and power system property, qualified small wind energy property, and geothermal heat pump system property.
In addition, H.R. 1424 contains a variety of other renewable energy tax provisions, including provisions allowing the energy credit to offset alternative minimum tax liability; increasing the amount of the biodiesel and renewable diesel fuel credits and extending the sunset dates until December 31, 2009; authorizing new clean renewable energy bonds and qualified energy conservation bonds; and extending the energy efficient commercial buildings deduction and the new energy efficient home credit.
Stan Whiteford, spokesman for the Public Service Company of Oklahoma, said that even though his company doesn’t develop its own wind farms, it did issue a request for proposals on up to 200 MW of renewable energy last spring.
“Since that time, we’ve been receiving proposals from developers of renewable projects and we’re still in the process of evaluating those,” Whiteford said. “We have several long-term purchase-power agreements with wind farms here in Oklahoma.”
One of the primary reasons the power from these farms is priced competitively is because of the tax credits developers receive, he said, adding that the renewal of the credits will probably mean continued development of renewables projects in the next year.
Without the credits, set to expire Dec. 31, industry experts would have fallen from $26.6 billion to $7 billion by 2009.
Exergy Development Group spokeswoman Holli High said judging from past experience, the wind industry would take an enormous hit without them.
“The wind industry is incredibly predictable when it comes to years in which the PTC is not in place,” she said. “New installed wind capacity dropped by 93 percent in 2000, 73 percent in 2002 and 77 percent in 2004 – all years in when the PTC was allowed to lapse.”
The Idaho-based Exergy would still be able to develop its portfolio without the credit, High said, but, “It’s safe to say, however, that few, if any, wind farms (would) be constructed in 2009 – by Exergy or anyone else.”
Christine Real de Azua, assistant director of communications with the American Wind Energy Association said one of the issues holding up the extension of the expiring credits was whether and how to pay for them.
One way to reach a compromise was to go for a shorter, and therefore more cost-effective extension, Real de Azua said.
“One of the reasons why solar received a longer extension is that the amounts of solar power installed and therefore ‘cost’ of the credit is smaller,” she said.