Credit

Power Company of Wyoming: Tax credit not necessary for massive wind farm

2014-08-17T11:00:00Z Power Company of Wyoming: Tax credit not necessary for massive wind farmBy BENJAMIN STORROW Star-Tribune staff writer Casper Star-Tribune Online

The largest proposed onshore wind project in the United States does not need a recently expired federal tax credit to be commercially viable, the head of the company planning to build 1,000 turbines in Carbon County said this week. 

Bill Miller, Power Company of Wyoming CEO, said the 3,000-megawatt Chokecherry and Sierra Madre wind farm would benefit from the 2.3-cent kilowatt-hour tax credit, which Congress allowed to expire Jan. 1. 

Electricity generated by the nearly $5 billion facility would be cheaper for utilities and consumers alike if Congress were to renew the credit, Miller said.

Still, he said, the wind farm will proceed regardless of what lawmakers decide.  

"Because of the size and the quality of the resource we have for the project, this project can be done without the production tax credit," Miller said in an interview Tuesday. "Quite frankly, though, it would be very beneficial to the project and the market if it were available, but it is not necessary for it to be viable. There are probably not a lot of projects today that could say it doesn’t matter. It does matter, but it is not absolutely required."

Miller's statement comes amid ongoing debate in Washington over whether to renew the production tax credit. Industry advocates say predictable, pro-growth tax policy is needed to ensure wind's continued expansion. Opponents argue that wind power is now a mature technology and no longer needs government help. 

Sen. Ron Wyden, an Oregon Democrat who chairs the Senate Finance Committee, has made renewal of the credit a priority. But those efforts have met opposition, particularly from House Republicans.

Rep. Cynthia Lummis, R-Wyo., is among those opposed to renewal of the production tax credit for wind. 

"Wind power has received an enormous taxpayer-backed investment in the form of tax credits since 1992," Lummis said in a statement. "But with a $13 billion price tag on extending the tax credit for a single year, it’s time to phase out this credit and let wind stand on its own merit in the marketplace instead of relying on federal dollars to pick winners and losers.”

Republican U.S. Sens. John Barrasso and Mike Enzi said they would support extension of the tax credit, provided that it call for a specific end date. 

"All energy sources need to stand on their own, and right now, the sunset date for solar energy is longer than wind," Enzi said following a meeting with the Star-Tribune's editorial board. "I’d support extending the wind credit to the same length. But all sources need to stand on their own."

Uncertainty over the measure's fate has produced something of a boom and bust cycle in wind development.  

New construction ballooned in the fourth quarter of 2013, as developers rushed to take advantage of a provision in the law allowing companies to qualify for the credit, provided that construction on their projects started before the end of last year.

Construction on new projects rose from around 2,000 megawatts of capacity during the third quarter to 11,000 megawatts in the year's last three months, according to the American Wind Energy Alliance, the industry's lobbying group.  

The results are evident several months later. More than 14,600 megawatts of wind power were under construction at the end of July. 

But new construction fell back to Earth in 2014. Work on new developments was less than 2,000 megawatts during the first quarter of the year before rebounding slightly in the second quarter.

Some firms said they are delaying investments while Congress decides how to proceed on the issue.

"Our view is that with the uncertainty in the market as a result of the expired PTC, there are not great conditions for investing and building new projects in the U.S. right now," said Paul Copleman, a spokesman for the Spanish renewable-power company Iberdrola Renewables. 

Chokecherry and Sierra Madre may signal a new chapter in the industry's history in which wind projects are not based on the availability of a tax credit, said Michael Webber, deputy director of the Energy Institute at the University of Texas at Austin.

Building turbines in areas of the country that have strong winds, such as Wyoming, is increasingly economical, Webber said. 

The industry's costs are down, and wind power provides a hedge for utilities against the volatility of natural gas prices. The U.S. Environmental Protection Agency's proposed rule aimed at limiting carbon pollution from coal-fired power plants also makes wind an increasingly attractive option, Webber said.   

"It kind of makes sense that there are going to be projects out there that don’t rely on subsidy because there are enough other motivating factors," Webber said. 

However, he rejected the argument that the credit should be ended because the wind industry is now mature. Oil and gas, coal and nuclear are all mature technologies, and all receive some form of government subsidy, Webber said. 

"The idea that the maturity of an industry determines whether it gets a subsidy isn’t how we do policy in the U.S.," Webber said. 

Reach energy reporter Benjamin Storrow at 307-335-5344 or benjamin.storrow@trib.com. Follow him on Twitter @bstorrow

Copyright 2015 Casper Star-Tribune Online. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(2) Comments

  1. dwardawea
    Report Abuse
    dwardawea - August 21, 2014 9:04 am
    With the PTC in place, American wind power has successfully been able to improve technology and wind prices have fallen more than 50% in the last five years. That’s made wind power highly competitive with all forms of energy across many parts of the country. Wyoming is blessed with one of the best wind resources in the world, and may be ahead of the curve in terms of price-parity, particularly when exporting wind power to a more expensive market, like California. However, wind power still needs a stable, pro-growth tax policy so that it can continue rapidly scaling up and bring similar economic benefits - including job creation, savings for consumers, rural economic development, and $15 billion a year in private investment - to many other parts of the country.

    David Ward, AWEA
  2. Mark Richardson
    Report Abuse
    Mark Richardson - August 18, 2014 4:36 pm
    Those who say wind is now a mature industry and thus should not receive any subsidies are typically the same who oppose repeal of 100 year old oil and gas subsidies like Intangible Drilling Costs and Percentage Depletion.

    A bit disingenuous to say the least.
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