January 1, 2013 – Vol.17 No. 42

CLIFF AVOIDED FOR RENEWABLES?
by Bruce Mulliken, Green Energy News

It's like a cartoon for kids. Good guy and bad guy (You decide who's who) are wrestling on the edge of a great canyon in the desert. With each blow they get closer to the precipice. Finally, locked to each other, sweaty face to sweaty face, inches from the cliff, they peer together into the depths below. They look into each other's eyes. Is this fight worth dying for? They ease their grip. Just then the rock beneath their feet begins to crack. It breaks. They fall in a crumble of stones. The fall is brief. There's another ledge below. Our story ends in another cliff hanger.

As I write this, early on New Year's Day, the U.S. Senate has approved a short term fix to keep taxes from rising and federal spending immediately cut across the board. They’ve rescued us from the “fiscal cliff.” Yet with a lingering holiday hangover, the U.S. House of Representatives has yet to vote up or down.

If I read the bill correctly the Production Tax Credit (PTC) for a wide variety of renewable energies, including wind energy, has been extended for at least another year. I say "at least" because of a significant change in the wording of the legislation: Projects need to be "started" by January 1, 2014 ( a year from now), not "completed." That is, there will no longer be a year-end rush to get projects done to get the tax credit.

But the wording opens new questions as well. What exactly doe "started" mean? Does a project start when development begins? ( Development itself begins with paperwork and engineering.) Or does a project start when the first shovel of dirt is turned? Probably the Internal Revenue Service will decide with industry input. In the most simple definition of the wording, a renewable energy builder could have any number of projects "started" by the end of 2013, then take years to actually complete them. In this simple definition 2013 could see a flurry of renewable energy projects started this year. The incentive to get the project completed and online is still the PTC itself, since the credit is only given based on the kilowatt hours of electricity produced and pumped to the grid. Obviously projects have to be completed and operational to generate power.

Without the extension of the PTC there was expected to be significant reduction in renewable energy projects leading to jobs losses in the industry.

The Senate bill also extends a wide variety of clean, renewable fuel and efficient energy tax breaks for a least another year. Other personal and business investment tax credits for a number of renewable energies, such as solar, are set to expire at the end of 2016.

Links:

Database of State Incentives for Renewable Energy (DSIRE)

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