Tax Credit May Breathe Life Into Wind Industry

The one-year extension of a U.S. tax credit for wind power includes modified terms that may revive an industry that's expected to stall this year.

Texas is the No. 1 wind energy producer, with more than 10,000 megawatts of capacity installed.

The production tax credit -- 2.2 cents per kilowatt-hour -- was due to expire at the end of 2012. Its extension was part of the bill passed to avert the so-called fiscal cliff.

Unlike past extensions, Congress is now allowing the credit to cover wind farms that begin construction in 2013, not just those that go into operation during the year. But uncertainty over whether the policy would be renewed is a key reason the U.S. is expected to install just 4,800 megawatts of turbines this year, down from an estimated 11,800 in 2012.

"This extension allows the industry to reactivate development that had been on hold since midyear," Tom Vinson, senior director of federal and regulatory affairs at the American Wind Energy Association, said Wednesday.

Luke Metzger, director of Austin-based Environment Texas, praised the move, saying in a release that wind power in Texas "avoids as much global warming pollution as taking 3.3 million cars off the road each year."

The tax credit helped make wind the largest source of new capacity in the U.S. last year.

Wind energy has the potential to supply up to 20 percent of America's electricity by 2030, according to the Energy Department.

The American Wind Energy Association, based in Washington, estimates that extending the tax credit will save up to 37,000 jobs.

In a related development, Texas' largest power grid said the Christmas Day cold front brought more than ice and snow to the state. The Electric Reliability Council of Texas said Wednesday that wind power hit a record 8,638 megawatts at 3:11 p.m., accounting for nearly 26 percent of electricity demand at the time.