Developers scramble as sun sets on energy credits

Uncertainty over the future of federal tax credits for renewable energy projects has local developers scurrying to complete work by year’s end out of fear the incentives may lapse.

Two programs in particular, the production tax credit for wind development and the investment tax credit for solar development, are set to expire at the end of the year if Congress does not pass extensions. An extension bill calling for $17 billion in tax incentives has been introduced but faces partisan hurdles in the U.S. Senate.

Some in the wind industry say the damage is already done.

“If we had a project that was ready for construction, we wouldn’t be building it right now,” said Paul Gaynor, president and CEO of Newton wind developer First Wind Inc. “It’s more luck than anything else that the two projects we have for 2008 began construction early and we have some projects that for their own individual reasons are not as dependent on the PTC than others.”
For a project to receive the tax credits, it must be producing power before the credits expire.

But history has shown that wind development slows dramatically when the tax credit is not in place. For example, when the production tax credit was allowed to lapse for 10 months in 2004, new capacity dropped to 389 megawatts from 1,687 megawatts the year before, according the AWEA.

Industry executives say they are confident some version of a tax credit will be passed eventually, although some executives said it may not be before a new president is sworn in. But the key to the industry’s success, they say, is long-term support and predictability.

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