Wind tax credits extended
Federal tax incentives for wind energy, which were to expire at the end of 2012, were extended for one year as part of the “fiscal cliff” budget deal passed by Congress on January 1.
For Deepwater Wind, the company that has plans to install a five-turbine wind farm off the coast of Block Island, this is good news.
According to Deepwater CEO Jeff Grybowski, the tax credit can be applied to a wind project that begins construction in 2013. Previously, it couldn’t be applied until a wind farm was actually delivering electricity.
There’s a specific set of rules for what determines the start of construction, explained Grybowski. The Block Island Wind Farm completion date is slated for 2015, but the company could take advantage of the tax break as soon as this year.
“We’re highly confident that we will qualify this year,” said Grybowski. “We’re going through an analysis to determine exactly what we need to do to qualify.”
The Production Tax Credit (PTC) provides a 2.2-cent tax break for every kilowatt hour of electricity a wind farm produces. Alternatively, wind projects that qualify for the PTC could opt for the Investment Tax Credit (ITC), which provide a 30-percent tax credit against the total building cost of the project.
Grybowski explained that Deepwater Wind would choose the latter option, the ITC — and the company has already based its financing on the assumption it would qualify for the ITC.
“If the tax credit hadn’t been extended, we would have had a hole in our financing credit,” he said. “This [extension] makes financing much more certain.”
The wind farm is estimated to cost $205 million.
The extension of wind energy tax credits is included in the passage of the bill to avert the “fiscal cliff” late New Year’s Day. President Barack Obama signed the legislation into effect that night.