Uncertainty hurts wind power-Tax credit renewal up in the air as Congress waits to decide

The largest wind farm in the world begins along U.S. 730, just past an abandoned mini-mart and a pot-holed parking lot. Hundreds of white, spindly turbines stretch for miles across the ridges of the Columbia River Gorge, their blades whirring in the relentless wind like a forest of gigantic pinwheels.

Gillian Flaccus
Associated Press The Arizona Republic

On a recent spring day, the turbines hummed at full power in winds that averaged nearly 45 mph. Miniature dust tornados whipped across the scrubland and barrel-sized tumbleweeds rolled furiously past.

On a day like this, the Stateline Wind Project on the Oregon-Washington line produces 300 megawatts – enough power to light 70,000 homes. Its owner, FPL Energy, is racing to increase that amount by more than half by Dec. 31 and install up to 1,200 megawatts of new wind power nationwide by the same date.

Like dozens of power producers nationwide, the Florida-based company must install the new capacity before the expiration of a tax credit that they say is critical to sustained wind development in this country.

Developers say the two-year credit – which can be, but is not always, renewed by Congress – creates an artifical pressure that drives the wind industry.

The incentive makes wind a cost-effective and environmentally friendly option by reducing the production cost so it is competitive with natural gas.

Yet uncertainty over if and when it will expire makes developers wary of long-term investment in the budding technology, they say.

The credit, enacted by Congress in 1994, pays wind developers 1.8 cents for every kilowatt-hour of energy they produce and lasts for 10 years once it is locked in.

Wind farms must be completely ready and producing power before the credit expires or they aren’t eligible.

In many cases, it takes up to three years to plan and complete a new project and companies – much longer than the scope of the two-year credit extension, said David Roberts, senior vice president for Seawest, a San Diego company that has wind farms in Oregon, California and Wyoming. Developers often find themselves in a race against time, he said.

"You have to take the risk that the tax credit is going to be there when you start the development of a project," he said. "It’s an artificial pressure."

The uncertainty of the tax credit also affects financing and a developer’s ability to find a purchaser for the new power.

"It’s hard for wind projects to give a firm date of when they can be online," said Scott Piscitello, development manager for RES North America, the North American arm of the British wind farm and development company Renewable Energy Systems. "The best we can promise right now is 10 to 12 months after the tax credit is extended, but we don’t know when that will be."

Such second-guessing has been part of the wind industry for nearly a decade, but recent developments hint that the incentive’s unintended side effects are starting to take a serious toll.

The most recent report by the American Wind Energy Association shows that U.S. wind installations lag far behind those of the leading European producers, such as Germany and Spain.

http://www.azcentral.com/arizonarepublic/business/articles/0317windpower17.html