Renewable Energy Governmental Incentives Set To Expire; Wind And Solar Sectors Concerned

January 28th, 2013 BY VeganVerve | No Comments
Wind Turbines

Renewable energy has been growing significantly across the United States in recent years. The economic downturn that impacted many sectors also impacted renewable energy but since then the industry has bounced back. The increasing prevalence and success of the renewable energy sectors is largely attributed to government incentives.

However, a number of these government incentives are about to expire soon and it is causing fear in the renewable sector. The 1603 Treasury grant program, which assists renewable developers, is set to expire at the end of 2011. Another incentive, the production tax credit for the wind industry, is set to expire at the end of 2012. However, the production tax credit requires wind farms to be operational prior to the 2012 deadline so with permits, construction and other slowdowns any wind farm not currently in the works is unlikely to benefit.

Both the solar and wind industries are attempting to get the government to include the incentives on bills prior to the end of the year. However, this is unlikely to occur especially as a recent bill was approved this Saturday that did not attach either incentive. Those in the industries believe it could greatly impact the success of renewable energy in the U.S. in the upcoming years, drastically reducing investments and expansion.

The 1603 Treasury grant program, which expires at the end of this month, gives renewable energy developers upwards of thirty percent in cash payments for their startup projects. This cash is in exchange for future tax credits by the government. This program is important for smaller companies and if it is not renewed it will likely decrease the number of small renewable companies. The 1603 expired last year as well but was given a one-year extension. Solar companies largely attribute the recent success in the industry to the grant.

The production tax credit gives wind farms 2.2 cents per kilowatt-hour of energy produced. This applies for the first ten years the wind farm is in production. As aforementioned, the tax credit will expire at the end of 2012 but wind farms need to be operational prior to the deadline. The tax credit has been in existence since 1999 but has been renewed three times.

According to those in the industry, when the tax credit expires, the year following experiences an installation decrease of seventy percent compared to the year before. Wind experts believe that if the production tax credit is not renewed soon there will be a significant decrease in investments between 2012 and 2013. Their statistics indicate that investments in 2012 would be $15.6 billion while 2013 would likely fall to $5.5 billion.

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