Congress Approves Energy Tax Credits and Saves 37,000 Jobs
With the last-minute fiscal cliff deal, most of the country breathed a sigh of relief. But those concerned about rural communities and renewable energy had an additional reason to celebrate the deal: the extension of the Investment Tax Credit and Production Tax Credit.
Both are vital tools for an industry that has proven beneficial to rural communities, especially in the Upper Midwest and Great Plains. The wind industry has helped provide new employment opportunities, sources of revenue, and additional sources of income to farmers and ranchers.
The extension saved an estimated 37,000 jobs out of the total 75,000 employed by the wind industry in the US, according to Bloomberg Businessweek. Construction of turbines and associated parts has led to new manufacturing booms in several states. Right now about 60 percent of component parts for turbines are made in the United States. Saving over a third of wind energy jobs maintains that additional economic opportunity for rural areas.
Other benefits for communities flow from the presence of projects and factories – new revenue sources from property taxes, which can amount to $189 million annually the county tax base. That new income for rural communities means more funding for the fire and police departments, public schools, infrastructure, and other public services. Land-lease payments for landowners in those communities average about $10,000 per turbine each year.
The extension changes the credits slightly and for the better. Developers no longer need to finish construction in 2013 to qualify. Instead they will qualify if construction begins this year.
The PTC continues to provide a return based on the energy produced by a project – about 2.2 cents for every kilowatt-hour the turbine produces during the first decade of operation. Some developers can instead choose to take the Investment Tax Credit, which returns some of the initial investment in projects immediately.
The extension is a boon to companies that were uncertain over the future of projects last year. 2012 was a good year for wind energy in the US. Expectations for new installations totaled 12,000 megawatts, but early in the year the actual total was around 50,000 megawatts. So far, wind energy has contributed about 35 percent of all newly installed generating capacity in the United States over the past five years. It has added more than coal and nuclear combined, coming in second only to natural gas. But uncertainty over the extension of the ITC and PTC made 2013 seem bleak.
The wind energy industry has shown great potential, and not just in energy output. It has shown an ability to create new domestic manufacturing jobs, provide additional income, and reinvest in small communities through new revenue sources. A short extension is better than none, but greater stability in the industry would help investors feel secure when they consider future projects and investments in rural America.
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