Breaking WIND: production tax credits are a big freaking deal
You can't be at a wind conference for very long without hearing about PTCs. It's just not possible. Today, I learned exactly how heavily what goes on in congress weighs on renewable energy producers. It might seem kind of boring, but the confusing mass of legislation that's supposed to incentivize the growth of green energy has a way of psyching out investors and killing wind projects. The big news right now is that congress dropped the ball. In particular, the House can't seem to agree on the terms of an extension for the tax credits -- so, there will probably be a lapse between this year's tax credits and when 2009's kick in. According to DOE Assistant Secretary Alexander Karsner, there's always a drop in wind investments when there's a lapse. That means contracts get put on hold or canceled -- and green energy goes bust. He seemed plenty pissed off about it.
A lot of the harumphing that went on at the press conference this afternoon calls for the Feds need to get a consistent policy together that doesn't jerk around developers and screw up progress. Basically, the whole system works backwards. The current business model involves using the tax credits to encourage developers to build a wind farm, then sell the energy, and then make use of the tax credits. When they don't get renewed, building slows down big time.
Production tax credits are awarded to energy producers by kWh, but they dictate the progress of the entire wind industry. Developers don't order turbines when they don't get a tax break, because their profits aren't looking as good. That affects GE, Vestas and so forth. According to Vic Abate -- GE's Vice President of renewable energy -- that sends projects elsewhere, like Canada or Europe -- where they can get more bang for the buck.
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