U.S. per-kilowatt hour tax incentive for wind energy production extended to end of year
A production tax credit (PTC) for wind energy production in the United States was extended by Congress through 2021 at the end of December last year, allowing companies to benefit at existing levels so long as they begin construction by Dec. 31, 2021.
The credit will continue at the same level it was last year: 60 percent of the full credit amount or $0.018 per kWh. Previous PTC legislation set 2016 as the last year wind projects could apply for 100 percent of the full credit amount, with decreasing incentives in the years following. The credit is based on either the year the project begins operation or the year in which 5 percent of the project’s total capital cost has been spent and construction has begun — a process known as safe harboring.
The Internal Revenue Service (IRS) recommended last year that projects which began construction in 2016 or 2017 another year for construction, to allow them five years to come online instead of the four years they are generally given.
All told, the U.S. Energy Information Administration (EIA) expects 12.2 GW of wind capacity to come online this year, although the bulk of this — 7.2 GW — won’t be seen until December. Currently, U.S. wind capacity sits at 112 GW, at least as of November 2020, as reported by the last EIA Electric Power Monthly report. Another 10 GW was expected in December, locking in the year’s total at 21 GW and making it a record year for wind installations.
No year saw greater installations, with the closest competition being 2012 when 13.2 GW were added. Much of this has been credited to the PTC and companies’ push to gain its full value.
