The renewable energy industry in the USA has called on the country’s government to implement stable, long-term policies in order to unleash “billions” in clean energy investment.
Expressing frustration at the failure of the US Congress to extend tax incentives for renewable energy, Michael Eckhart, President of the American Council on Renewable Energy said that the renewable energy industry is at a crucial “tipping point”, and that the uncertainty surrounding the Production Tax Credit (PTC) for wind is “outrageous and intolerable”.
"Too often, politics, rather than economics, has shaped the debate about extending the production tax credit," said Eckhart. “If Congress fails to extend the PTC, it would be pulling the rug out from underneath the $17 billion of activity in the US renewable energy industry next year.
A new study carried out by GE Energy Financial Services shows that on previous occasions when the PTC has been allowed to expire, investment in wind power has subsequently fallen by 70 per cent. The study also shows that the PTC more than pays for itself through tax revenues from the projects’ income, vendors’ profits and workers’ wages.
The current PTC is due to expire at the end of 2008 but the deep division in Congress is holding up the legislation.
“Even a five-year extension would unleash billions in investment,” said Randall Swisher, Executive Director of the American Wind Energy Association. “To succeed requires a bipartisan approach, especially in the Senate ... but Congress is deeply divided and this makes it difficult to get anything done, even the PTC extension.”
“We are just asking for the extension of an existing policy that is already in place and which will enabled continued investment in this industry,” commented Eckhart, who also pointed to Congress’ lack of understanding of the impact that the uncertainty has on the industry.
“At risk is the opportunity for the nation to build a strong manufacturing industry around renewable energy,” said Swisher. “The uncertainty means that project developers and vendors can’t form strong relationships with suppliers, who are now looking increasingly at China and other markets with long-term stable environments.”
GE Energy’s study shows that wind farms built in 2007 – supported by the PTC – carry a net present value to the US Treasury of $250 million. In addition, wind power projects built in 2007 created more than 17 000 construction jobs and 1600 long-term operations-related jobs.
“Congress is debating how to pay for the wind tax credits perhaps without realizing that, over time, wind farms pump more money into the US Treasury and state and local coffers than they take out,” Kevin Walsh, Managing Director of renewable energy at GE Energy Financial Services, said. “Our study shows that the wind farms more than pay for themselves through existing tax revenues, so it’s time to renew the incentives immediately.”
The most recent attempt to renew the PTC failed earlier in June in a US Senate vote that centered on how to offset the cost of the PTC with tax revenues.
GE Energy Financial Services– whose $3 billion renewable energy portfolio is dominated by wind power – also points out the environmental benefits of wind power in the study, which shows that projects built during 2007 avoided the emission of around 10 million metric tonnes of CO2. The company’s wind portfolio includes 34 farms and 3550 MW.
A recent US Department of Energy analysis showed that by 2030, wind power could account for 20 per cent of the USA’s electricity demand.
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