Failure to Renew Production Tax Credits Could Dwindle New U.S. Wind Projects

Implications:     Wind power qualifies for production tax credits.  These production tax credits are set to expire on December 31, 2008 without renewal by Congress and the President.

Analysis:     Wind projects qualify for production tax credits equal to approximately 2.1 cents/KWh produced during the first 10 years of a project.  The wind project must be completed and operational by December 31, 2008 in order to qualify for these credits.               

    These production tax credits help make wind projects economic to proceed versus alternatives.  In 2007, the U.S. expanded its generating capacity by 45% to over 16,800 installed MW. 

     In 1999, 2001, and 2003, the tax credits lapsed and development dropped off significantly; by up to 93% in one of those years.                

    On June 17, Congress could not agree where to get the estimated $7 billion in lost tax revenues over 10 years to renew the credits.  At this point, it is difficult to forecast if Congress will renew these tax credits.  As we approach the end of 2008 without a renewal to the credits, it could have an impact on the orders for wind turbine manufacturers.  Wind turbine manufacturers include General Electric, Vestas, Siemens, Gamesa, Mitsubishi, and Suzlon.