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PTC renewal could stimulate wind energy development

Denzil31 / flickr

Wind farm developers in the United States may want to gear up planning for new projects, as action in Washington to extend the Production Tax Credit (PTC) could come before year’s end. The PTC has provided incentive for a dramatic increase in wind farms and growth of the wind energy industry. That growth has resulted in greater wind energy capacity since the PTC was established.

The PTC, however, was allowed to expire at the end of 2014. There is new legislation in Congress that would extend the PTC. It received strong bipartisan support in the Senate Finance Committee in May. Now, Marika Fredriksson, Chief Financial Officer of Vestas Wind Systems, the world’s largest wind turbine manufacturer, told Reuters that she believes Congress will approve an extension of the PTC in December 2015.

The PTC provides a 2.3-cent per kilowatt-hour (kWh) for the first 10 years of a renewable energy facility’s operation.

Proven effectiveness

It is difficult to dispute the effectiveness of the PTC. Between 2007 and 2014, wind capacity nearly quadrupled in the U.S., representing an annual average investment of nearly $15 billion. More that 550 manufacturing facilities located in 43 states produce 70 percent of the wind turbines and components installed domestically, up from 20 percent in 2006-2007. And, the cost of generating electricity from wind fell by more than 40 percent over the past three years.

Since it was first approved in 1992, the PTC has been extended six times and allowed to expire six times. Not surprisingly, that has resulted in a boom-bust cycle of development. In years following expiration, installations dropped between 76 and 93 percent. Lapses in the PTC caused a dramatic slowdown of planned wind projects and layoffs at wind companies and manufacturing facilities. Upon restoration of the PTC, however, the industry, after regaining its footing, resumed a growth cycle.

The nation is in the final year of one of those boom cycles. Wind projects under construction currently are due to the start construction extension of the PTC at the end of 2014.

Strong development

According to the American Wind Energy Association (AWEA), more than 12,700 MW of wind capacity was under construction in 22 states at the beginning of 2015 and more than 3,300 MW of capacity has signed purchase agreements since the beginning of 2014 that could be eligible for the PTC. There are more than $20 billion worth of wind farms under construction currently in the U.S. For the year, AWEA reports, the wind energy industry has installed more than double the MW installed during the first three quarters of 2014. There is now more than 69,470 MW of installed wind capacity across the U.S. A near-record of more than 13,250 MW of wind capacity is under construction, with an additional 4,100 MW in advanced stages of development.

Uncertainty in federal policy regarding the wind energy industry and access of ample transmission infrastructure are two barriers to spreading the industry’s benefits throughout the nation.

geoAMPS, a technology company in the Columbus, OH, area, has developed a software product called altAMPS that is utilized by leading organizations in the wind energy industry to increase efficiencies in developing, constructing and operating wind farms.

Learn more about altAMPS by calling 614-389-4871 or scheduling a demonstration.

Schedule a Demo

Dan Liggett is Communications and Public Relations Consultant for geoAMPS.

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