Policy - Federal Level
In order to be financially competitive, most wind projects need to take advantage of federal and, where available, state tax incentives. It is critical to understand the role and mechanics of tax incentives while developing a commercial-scale community wind project because these incentives can represent one-half to two thirds of the total revenue stream over the first 10 years of operation due to the Federal Production Tax Credit (PTC) and Modified Accelerated Cost-Recovery System (MACRS) or other type of depreciation that can be applied to wind energy assets. You will need to consult a tax professional in the early stages of project planning to ensure that your financial projections are valid and accurately take into account the project’s tax burden and benefits.
Lawrence Berkley National Laboratory published this report, written by Mark Bolinger, to address concerns regarding the interaction between the USDA Farm Bill and the federal Production Tax Credits for wind energy projects.
The Database of State Incentives for Renewables and Efficiency (DSIRE) is a comprehensive database of incentives for wind and other forms of renewable energy. It is a great resource for up-to-date policy information.
The Clean Renewable Energy Bond (CREB) program is a new financial incentive created in the Energy Policy Act of 2005. It is available to municipal utilities and electric cooperatives and is intended to promote renewable energy development.
The Value-Added Producer Grant (VAPG) program was first established in the Agriculture Risk Protection Act of 2000 and was later amended in the 2002 Farm Bill. Grant funds are available for planning activities and working capital for marketing value-added agricultural products and for farm-based energy. Independent producers, farmer and rancher cooperatives, agricultural producer groups, and majority-controlled producer-based business ventures are eligible.
Double-declining balance, five-year depreciation schedule (I.R.C. Subtitle A, Ch. 1, Subch. B, Part VI, Sec. 168 (1994) (accelerated cost recovery system)) is another federal policy that encourages wind development by allowing the cost of wind equipment to be depreciated faster.
Winners of the USDA Farm Bill for uses with wind power, 2004-2006