The increasing prevalence and success of the renewable energy sectors in the U.S. is largely attributed to government incentives. One such incentive, the production tax credit, has considerably boosted the wind industry. Many in the wind energy field have pointed to the incentive as being behind the growth of wind energy over the last decade.
The production tax credit 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.
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. 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.
Due to the pressure of an approaching deadline in 2012, especially if the government does not renew the incentive, wind installations greatly increased at the end of 2011. According to a new report by the American Wind Energy Association, a total capacity of 6,810 megawatts in wind energy was installed in the U.S. in 2011. However, more than half of the installations, 3,444 megawatts, were installed during just the last quarter alone.
Currently, wind developers are working to construct an additional 8,300 megawatts of wind energy by the end of 2012. If all of the construction is complete by the end of the year, not only will the installations top that of 2011 and prior years but will guarantee inclusion in the production tax credit.
The U.S. installed thirty-one percent more wind capacity in 2011 compared to 2010 but many fear the growth of wind will decrease considerably come 2013. Companies are already considering how many jobs they will have to cut in order to stay afloat in a production tax credit-free U.S. environment.
