Incentives
Chapter 10: Tax Incentives
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.
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A Survey of State Support for Community Wind Power Development
A Survey of State Support for Community Wind Power Development by Mark Bolinger of Lawrence Berkeley National Laboratory, published March 2004. The report is part of series called Case Studies of State Support for Renewable Energy.
Avoiding the Haircut
Avoiding the Haircut: Potential Ways to Enhance the Value of the USDA's Section 9006 Program.
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.
Database of State Incentives for Renewables and Efficiency
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.
State Property Tax Incentives for Wind
Many states have property tax incentives for wind energy.
Look for more information on the DSIRE web site.
New Market Tax Credits
Overview
Clean Renewable Energy Bonds (CREBs)
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.
Community Wind Financing Handbook
This guidebook was created by Charles Kubert for the Environmental Law and Policy Center in 2004. It talks about business models, sources of equity, grant and loan programs, incentives, and power purchase agreements for community wind projects. You'll find it online on the ELPC website.
Renewable Portfolio Standard (RPS)/Renewable Electricity Standard (RES)
A minimum renewable energy requirement for a region's electricity mix. Under an RES, electricity suppliers are required to provide some percentage of its supply from renewable energy sources. RPS proposals frequently ease that requirement by including a tradable credit system under which electricity suppliers can meet the requirement by buying and selling renewable energy credits (RECs).
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