Wind proponents race the clock

New York Times News ServiceDecember 26, 2013 

As the rest of the world prepares to toast the new year, the wind industry is hard at work on its own year-end tradition, rushing to make sure projects qualify for an important subsidy before it is set to vanish at the stroke of midnight Tuesday.

Developers are signing deals, ordering equipment and lurching ahead with construction starts to qualify for a tax credit that is worth 2.3 cents a kilowatt-hour for the first 10 years of production. This month, giant turbine-makers such as Vestas and Siemens have announced major new orders, including a deal worth more than $1 billion with MidAmerican Energy, an Iowa-based utility majority-owned by Warren E. Buffett’s Berkshire Hathaway.

In previous years, the projects had to be in commercial operation by New Year’s Eve. This year, they need only to have begun.

“What we see right now is a race to the finish line, where we’re trying to get projects signed,” said Mark Albenze, chief executive of the Wind Power Americas unit of Siemens Energy.

Although the wind industry has grown enormously since the tax credit began in the 1990s, it has followed a boom-and-bust cycle driven by the fate of the subsidy. Over the years, Congress has allowed it to expire several times before renewing it, according to the American Wind Energy Association, a trade group. With each expiration, new installations dropped sharply.

Under the current rules, a lapse in the credit will not have much immediate effect, since many projects are in the early stages of development.

However, executives said, developers are unlikely to start any projects without a credit in place, because they cannot compete with power generation from other sources such as cheap natural gas. And with prospects for a redesign of the whole tax code looking dim at the moment, clean-energy advocates are calling for yet another extension of the subsidy.

Opponents of the credit campaigned against a renewal all fall. They include some fiscal watchdogs worried about the cost. But the bulk of the opponents are mostly generators of other forms of energy, who say that, by subsidizing wind, the government is adding supply to the market in a way that depresses prices for electricity, cutting the revenues of other generators and, in some cases, driving them out of business.

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