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Tax credits - the wind in wind energy


The Green Mountain Energy Farm near Fluvanna, Texas, the leading state in wind energy production. Photo: Courtesy of Wikimedia Commons

For wind power, 2011 was a great year. California added more new wind energy to the grid than any other state, according to a report published Tuesday by the U.S. Department of Energy.

A number of other states received high honors as well. These include Illinois, Iowa, Minnesota, Oklahoma and Colorado, which churned out at least 500 megawatts of electricity from wind turbines, or enough juice to light up 125,000 homes.

This year could be even better for wind renewables as people rush to "get into the game" while the goings good, and relatively cheap. After that, the winds of change will sweep across the country as many of the federal tax incentives that made renewable energy more alluring expire at the end of 2012.

Which tax incentives are these? Mostly those tucked within the compact wording of the American Recovery and Reinvestment Act of 2009. One provides a "30 precent cash grant from the Treasury in lieu of federal tax credits," reads the report. Many investors jumped at this opportunity, more than 60 percent in fact. Another allows wind power projects to "choose a 30 percent investment tax credit instead of the production tax credit."

All this is to say, it became much easier over the last few years for wind project developers, mostly comprised of independent businesses rather than utilities, to work with investment banks and insurance companies to get their farms up and running. American wind farms now provide about 3 percent of the nation's electricity, and are also frequently built here right on U.S. terra firma. It doesn't approach the pervasive imprint coal, oil, natural gas or nuclear have in producing electricity, but it's a fingerprint at least.

Tax incentives aren't the only boost to thank for this. Not in the least. There have been technical and fiscal improvements in the prices of turbines, installing the farms and the price of the energy itself. Still, without continued support from federal policies, combined with the low price of other energy, mostly natural gas, the gusto with which new wind power projects were erected since 2009 is not predicted to continue spreading like seeds in the wind.

The views expressed are those of the author and are not necessarily those of Scientific American.

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