Currently, onshore and offshore wind projects must be placed in service by December 31, 2012 to qualify, while the deadlines for other technologies range from 2013 for marine and hydrokinetic facilities, biomass, geothermal, municipal solid waste and qualified hydropower to 2016 for solar energy projects. The bill approved by the Senate committee would extend the deadline for wind projects, allowing eligible facilities to elect to take the ITC in lieu of the PTC if they begin construction by the end of 2013. The committee estimates that the ITC extension will cost $135 million over ten years, suggesting a total investment in eligible resources of $450 million.
Given the quick return of the ITC and the relatively high capital costs of offshore wind projects compared to other renewable resource types, many offshore wind developers are expected to choose the ITC over the PTC. The ITC extension would be especially beneficial for the offshore wind developers who are capable of beginning construction before the end of 2013. Offshore wind projects typically take several years to navigate the regulatory path needed prior to construction. Even with the extension, many proposed offshore wind projects cannot likely begin construction prior to 2014. Only the projects farthest along their development paths are likely to benefit from such an extension. These projects might include Cape Wind’s project off Massachusetts, Deepwater Wind’s project off Rhode Island, and Fishermen’s Energy’s project off New Jersey. If the bill is enacted into law, other developers will have to scramble for the approvals and financing needed to begin construction prior to the end of 2013.
Having passed the Senate Finance Committee, the bill is expected to be considered by the full Senate when it returns from its recess in September. To be enacted into law, the measures would also have to be passed by the House.
While the committee’s vote was bipartisan, it is unclear whether both chambers of Congress will follow the committee. Nevertheless the committee endorsement offers developers hope of an extension to these business energy tax incentives.
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