Ports-to-Plains Alliance Energy Summit April 20, 2012 Washington, DC Renewable Energy Production Tax Credits and Rural Communities PTC = Jobs John L. Cohen, Vice President, Government Affairs, Alstom, Inc.
Last edit: 00/00/2009 The key point about this slide are:
The past four years of consistent tax policy demonstrate the economic security and energy diversity benefits that the wind industry can continue to provide in a stable policy environment. The wind industry has experienced an average annual growth rate of 35% over the past four years. Over 400 facilities across 43 states manufacture for the wind energy industry today. Sixty percent of a wind turbine’s value is now produced here in America, compared to 25% prior to 2005. More than $60 billion of investment has been made since 2005. The U.S. wind industry installed 6,816 megawatts (MW) in 2011, 31 percent higher than 2010, for a total of 46,916 MW installed in the U.S. to date. There are more than 8,300 MW under construction, setting the stage for a strong 2012.
Wind PTC = credit for 2.1 cents per kilowatt hour of production. The program has been around since 1994, but has been cyclical rather than a sustained effort The wind industry’s boom-and-bust cycle is evidence that the PTC affects project development. When the PTC has been allowed to expire in the past (1999, 2001, & 2003), installations have dropped between 73% and 93%, with corresponding job losses.
Estimated revenue affects of the revenue provisions contained in S.1220, ‘The Fulfilling U.S. Energy Leadership (Fuel) Act of 2011’, fiscal years 2012-2021, as scored by the Joint Committee on Taxation. The Act includes a 4-year extension of the PTC for wind, hydro, biomass, and geothermal, so $13.6 billion slightly overstates the cost of an extension for wind only. According to a 2011 Navigant study commissioned by AWEA, a four year PTC extension could result in a 87% return on investment for U.S. taxpayers. Extending the PTC 4 years should be viewed as an investment by U.S. taxpayers. The investment is the tax credits The returns are both in the form of taxes on revenues generated by, and the investment spurred by manufacturing, construction and operation of, the plants. Navigant calculated return of investment of a 4 year extension using the following inputs: Investment: tax credits for wind plants installed from 2013 to 2016. Returns: manufacturing investment, expenditures during construction, land lease payments over the life of the plants out to 2021, operating expenditures and federal and state taxes on income from power sales. The PTC extension would cost ~$13.6B*, but result in ~$25.6B in investment and tax revenue. Return on investment = (sum of benefits)/(sum of costs)-1=$25.6B/$13.6B-1=87% This calculation excludes indirect and induced investment. Last edit:
Renewable Energy Production Tax Credits and Rural Communities
PTC = Jobs John CohenVice President, Government Affairs April 20, 2011