Wind energy deal would extend tax credit

The wind energy industry welcomed a congressional deal announced this week that would extend federal tax credits for wind projects.

The extension of the production tax credit is tied to a provision lifting the ban on exporting U.S. crude oil, which is part of an overall spending bill. Under the deal, the tax credits would be reduced gradually over the next few years until they're phased out completely in 2020.

That would provide the wind industry some certainty after years that saw short-term extensions and expirations. LM Wind Power cited inaction over the tax credit and a slowdown in the industry when it cut 345 jobs from its Grand Forks wind turbine blade plant in 2012. The local facility now employs roughly 600 and is looking to add more.

"A five-year extension would be great news for us and the wind industry as a whole," Lene Mi Ran Kristiansen, spokeswoman for the Denmark-based company, wrote in an email. "If the five-year extension is fully passed and implemented, it would provide the long-term certainty and stability that allow us to continue to confidently invest in the future with our customers-to the benefit of the business, our employees and the local communities in which we operate."

Congress still needs to vote on the spending bill.

Negotiations

Sen. Heidi Heitkamp, D-N.D., said provisions benefiting the wind and solar industries were crucial in getting support for the oil export ban, which she helped negotiate.

"If there were not provisions in here for solar and wind there would not have been a negotiation," she said in a conference call with reporters Wednesday morning. "Being able to link oil exports with wind has given us this opportunity to give certainty to two critical industries in our state."

In an emailed statement, Sen. John Hoeven, R-N.D., said he supports phasing out the production tax credit "because it gives the industry the time and certainty it needs to move to a market-based approach." Heitkamp, Hoeven and Rep. Kevin Cramer, R-N.D., supported lifting the oil export ban.

But Cramer said Democratic leadership was seeking longer renewable energy tax credit extensions in exchange for lifting the oil export ban. He said the deal struck this week is a "perfect illustration of how divided government has to work."

"I think they found the balance," Cramer said.

Stability

The production tax credit is worth 2.3 cents per kilowatt-hour of electricity generated. Under the deal struck by lawmakers, the credit would be extended for 2015 and 2016, reduced to 80 percent of present value in 2017, followed by 60 percent in 2018 and 40 percent in 2019 before being phased out in 2020.

Tom Kiernan, CEO of the American Wind Energy Association, said that would drive more development in wind projects. Wind energy accounted for more than 17 percent of the electricity generated in North Dakota last year, but the state is "only using a fraction of its wind resource potential," according to an AWEA fact sheet.

"If this passes, our industry will get a break from the repeated boom-bust cycles that we've had to weather for two decades of uncertain tax policies," Kiernan said in a statement. "AWEA has sought greater stability in the credit, with an extension for as long as possible."