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Clarifying the dollars involved in wind energy's tax credit

Clarifying the dollars involved in wind energy's tax credit

As the presidential campaigns have taken up the question of whether to extend the federal wind energy Production Tax Credit (PTC) beyond 2012, some confusion has arisen about the dollars involved.

The PTC provides a credit against taxes of 2.2 cents for each kilowatt-hour of electricity that a wind farm generates during its first 10 years in operation.

The Congressional Joint Committee on Taxation estimates that between today and 2015, the current PTC will result in $1.36 billion of lost tax revenue per year — but, it has leveraged $15.5 billion per year on average in new private investment.

A recent study by NextEra Energy found that wind energy generates so much economic activity that a one-year extension of the tax credit would provide a net benefit of $768 million to local, state, and federal taxpayers.

That's not how Congress counts it. However, even taking the narrowest definition of the net “cost” of an extension, the numbers being used in some campaign statements are still gross exaggerations that add up imagined tax savings all the way out to the year 2022 — when what's currently under debate is just an extension for projects that start next year.

Greentech Media has published an analysis of that issue as well as a number of other useful statistics on the wind energy's growth. Recommended reading.

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Peter Kelley leads AWEA's Public Affairs Department; provides strategic communications advice to the industry; and oversees media relations, publications, social media, and advocacy advertising. He previously was principal of RenewComm LLC, a PR firm for clean energy companies and nonprofits, and started his career as a newspaper reporter. He holds a bachelor’s in Government from Harvard University.

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