overview
since 2013, however, refl ecting the uncertainty of the PTC. As a result of advantageous legislation over the fi ve-year
period from 2010 through 2014, revenue for the industry has increased at an average annual rate of 11.9% to reach $14.2 billion. Moreover, as demand has increased for wind turbines, the number of companies manufacturing wind turbines and related products has grown at an annualized rate of 3.9% in the fi ve years to 2015, to 23 operators.
Canada continues to expand its wind energy portfolio, so this combination turbine and observation deck atop Grouse Mountain in North Vancouver, BC, could get some company.
power installation. With private companies reluctant to make large investments during and after the recession, government incentives helped push fi nancing for wind power projects that otherwise would not have attracted the investment required to begin construction.
Although the PTC was set to expire at the end of 2012, it was quickly extended through the end of 2013 as a part of the American Taxpayer and Relief Act. The new legisla- tion changed the wording of the PTC; previously, eligible projects had to be in-service and operating prior to the incentive’s expiration. Following the change, all projects that began construction prior to January 1, 2014, were eligible to benefi t from the PTC. Regardless of this extension, new capacity added fell dramatically in 2013 as wind farm de- velopers were uncertain about future funding and tax credit conditions. As a result, only about 1098 MW of wind power were added in 2013, and industry revenue plummeted by more than 90%. Despite a large lobbying effort from industry fi rms and associations, the PTC expired at the end of 2013. However, because of the new PTC stimulations, projects that had begun construction before 2014 were eligible to receive the benefi ts of the tax credit. As a result, wind generation capacity increased in 2014 to total 65,643 MW (according to the American Wind Energy Association) and is set to reach 75,594 MW by the end of 2015 (according to the EIA). Industry fi rms and associations continued to lobby con-
Production Tax Credit Drives Growth The largest benefactor to the industry over the past fi ve years has been the federal PTC, which gave wind power-gen- eration companies a tax credit of 2.3 cents per kWh of energy produced. Additionally, the American Recovery and Rein- vestment Act of 2009 allowed companies that were eligible for the PTC to opt for the federal investment tax credit (ITC), which allowed wind power-generation companies to write off 30% of the taxes associated with building a wind farm. This factor increased demand for turbines and related products by cutting the initial costs of wind farm construction. Further- more, the government eliminated the $4000 ITC limit for small turbine construction to encourage growth in residential wind
gress through 2014 for a multiyear extension of the PTC, aim- ing to keep the full credit in place through 2015, then reduc- ing support to 80% in 2016 and 60% in 2017 before letting the credit fully expire. In the last weeks of 2014, Congress responded by passing a one-year retroactive extension for the PTC; consequently, all projects that had begun construc- tion in 2014 were eligible to receive the benefi ts. This retroac- tive extension of the PTC had little effect on the industry, as developers only had a matter of weeks left at the end of 2014 to begin construction projects that could qualify for the PTC. Indeed, according to North American Wind Power, a maga- zine dealing with all aspects of the wind energy business, the retroactive extension of the PTC was a “worthless bill.”
As the PTC expired at the end of 2014 and has yet to be reinstated, wind power capacity additions are projected to completely stop.
16 — Energy Manufacturing 2015
Photo courtesy Canadian Wind Energy Association
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