federal incentives for Wind Energy Systems
Federal Production Tax Credit. The Wind Energy Production Tax Credit (PTC), is a per kilowatt-hour tax credit for wind-generated electricity. Available during the first 10 years of operation, it provides 1.5 cents per kWh credit adjusted annually for inflation. The adjusted credit amount for 2005 is 1.9 cents per kWh. Enacted as part of the Energy Policy Act of 1992, the credit has gone through several cycles of expiration and renewal. The inconsistent nature of this tax credit has been a significant challenge for the wind industry, creating uncertainty for long term planning and preventing steady market development. In July 2005, the PTC
was "seamlessly" renewed for the first time when an extension through
December 31, 2007 was included in the federal Energy Bill. An American
Wind Energy Association press release details this most recent
renewal. The tax credit also is primarily useful for corporations and
is difficult (but, not impossible) for other entities (farmers and
individuals, schools, municipal utilities, etc.) to use effectively.
Public Utilities Regulatory Policy Act of 1978 (PURPA ). PURPA was enacted as part of the National Energy Act of 1978, during a time of unprecedented energy supply instability in the United States. The law requires utilities to purchase energy from non-utility generators or small renewable energy producers that can produce electricity for less than what it would have cost for the utility to generate the power, or the "avoided cost." Although once considered a key incentive for renewable energy, PURPA is less helpful for renewables today due to lower fossil energy prices.
Clean Renewable Energy Bonds (CREBs). Clean Renewable Energy Bonds are tax credit bonds with an interest-free finance rate for governmental bodies (including tribal governments), municipal utilities, and rural electric cooperatives included in the 2005 energy bill. Visit our CREBs Fact Sheet for more information. More information also available at the Public Renewable Partnership website, including a presentation on Public Power and the CREBs program.
New Markets Tax Credits (NMTCs)
The New Markets Tax Credit Program. This program provides a credit against Federal income taxes in exchange for making qualified equity investments in designated Community Development Entities (CDEs). The CDE may then invest in renewable energy projects. For more information visit our NMTC Fact Sheet.