By Jonny Wakefield
April 3, 2014
Offering energy companies tax credits in exchange for switching to wind power was one of U.S. president Barack Obama's signature energy initiatives. But the latest expiry of the on-again off-again renewable energy production tax credit has sent the wind power industry into a tail spin, according to a new study from Navigant Research.
The latest from the U.S. energy analyst says new installation of wind turbines has fallen off a cliff since the tax credit expired. The power generation capacity of new wind developments dropped 93 per cent over this time last year.
Investors have jumped ship, nervous about wind's prospects without the roughly $2 billion worth of government backing.
In 2012, wind production increased by more than 13,000 megawatts, a new record. The new study claims the growth was due to the credit, which offered wind producers 2.3 per cent back on their taxes for every kilowatt-hour generated over the course of ten years.
The tax credit has been offered off and on for roughly two decades, and reviving it was one of President Obama's energy policy priorities. It expired at midnight on December 31, 2013, due to congressional inaction.
Wind proponents continue to defend the energy source's efficacy.
New research out of Syracuse University suggests the cost of natural gas — touted as the cheap new domestic fuel source in North America — is roughly equal per kWh to wind. In that analysis, wind costs around 8.7 cents per kWh, while gas sits at 6.6 cents. But costs equalize when a wind project's 20 year life span is factored in.
Tax credits for wind have met success north of the border. Nova Scotia currently uses wind for around 7 per cent of its power needs, thanks to an incentive that offers producers with projects of 50 kW and smaller 49.9 cents per kWh, and projects larger than 50 kW 13.1 cents per kWh, according to documents from the Canadian Wind Energy Association.
Photo Credit: Land Rover Our Planet