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Roth: Debate over wind power tax credit looming

By June 13th, 2022No Comments

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Oklahoma currently ranks eighth in the nation for installed wind-generation capacity, according to an Energy Department report. The Energy Department reports strong growth in the wind energy market in 2011, increasing the U.S. share of clean energy and supporting tens of thousands of jobs.

Despite recent technical and infrastructure improvements and growth in 2012, 2013 may see a dramatic slowing of domestic wind energy implementation due to the possible expiration of federal renewable-energy tax incentives. Many argue that these tax incentives prop up an energy source rather than allowing competition based upon economics.

Is this an America opportunity? There have been genuine concerns about Chinese efforts to manufacture wind components. Is this an opportunity for a fuel source to complement the base load power of clean natural gas? The intermittency of wind is not a good partner to older coal nits that are less agile than natural gas plants. Thus, in both instances the answer is increasingly, yes.

Nearly 70 percent of the equipment installed at U.S. wind farms last year was from domestic manufacturers, double the 35 percent in 2005. The wind sector employs about 75,000 Americans. Nationally, wind power represented nearly a third of all new electric capacity additions and accounted for $14 billion in new investment.

The Production Tax Credit provides a tax credit of 2.2 cents per kilowatt-hour, or kWh, to U.S. wind producers for the production of electricity from utility-scale wind turbines for 10 years from the start of the project.

The tax credit is set to expire on Dec. 31. If it does, the American Association of Wind Energy says it could result in the loss of an estimated 37,000 jobs.

Those who oppose the tax credit extension said that it would cost billions in lost tax revenue. According to Congress’ Joint Committee on Taxation estimates, the credit cost is about $1.3 billion in fiscal 2012. Is the loss in tax revenue more detrimental than the loss of facilities and jobs and possibly wind capacity?

Tulsa-based wind turbine tower manufacturer DMI Industries is closing its plant in November and laying off 167 people. As Dec. 31 nears, further losses of jobs and facilities are likely at a time when the economy is still sputtering.

Oklahoma generated about 7 percent of its total electricity from wind in 2011, enough wind capacity to power hundreds of thousands of homes. According to the state Commerce Department, Oklahoma will meet the state’s 2015 goal of 15-percent renewable energy by the end of 2012.

Two new wind projects for 2012 include the 235-megawatt, or MW, Chisholm View development north of Enid and the 370 MW Novus project in the Oklahoma Panhandle.

President Barack Obama has made clean, renewable wind energy a critical part of his energy strategy that aims to develop more secure, domestic energy sources and strengthen American manufacturing.

Mitt Romney has said that if elected president, he would allow the wind credit to expire.

Assuming the tax credit is not extended, estimates for the 2013 market range from 1 to 2.4 gigawatts, or GWs. If it is extended, the 2013 market would be significantly larger, ranging from 1.2 to 7.5 GWs. It likely would still be less than the potentially record-setting 2012.

Either way, Oklahoma’s native fuels (natural gas and wind) are most likely going to bring the state’s electricity future to an outlet near you in the years to come.

Jim Roth, a former Oklahoma corporation commissioner, is an attorney with Phillips Murrah P.C. in Oklahoma City, where his practice focuses on clean, green energy for Oklahoma.