Wind Companies Scramble to Secure Tax Credit Before Expiration
The expiration of the wind Production Tax Credit has already become a certainty, leaving many in the industry racing against time in recent weeks to make sure they qualify.
Projects have to be initiated before Jan. 1. As a result, companies are working around the clock to secure deals with turbine manufacturers and farm developers to get a credit.
“What we see right now is a race to the finish line, where we’re trying to get projects signed,” Mark Albenze, chief executive of the Wind Power Americas unit of Siemens Energy, told The New York Times. “It’s a little bit of a different dynamic, whereas in ’12 our projects teams were the ones stressing out in December and now it’s our acquisition team.”
Siemens sold 448 turbines to MidAmerican Energy two weeks ago, in what was the world's largest order for onshore wind projects. MidAmerican will use the turbines for five different projects in Iowa.
Companies like the Warren Buffett-owned MidAmerican that made the cut qualify for 2.3 cents a kilowatt-hour for the first 10 years of production. Others will have to hold out for a temporary or permanent extension. Governors, senators and groups like the American Wind Energy Association fought for an extension, but Congress remained gridlocked before holiday vacation. It remains unseen if the tax credit will get an extension shortly after New Year's like it did after a brief ending at the end of 2012.
The wind PTC is one of 31 energy policies that U.S. Senate Finance Chairman Max Baucus has proposed consolidating into one of two new tax credits in 2017.
“In the near term, projects that do not have the PTC attached to them are probably difficult to justify economically for buyers to purchase, and therefore for us to build," said Kevin A. Lynch, managing director of external affairs at Iberdrola Renewables. “Wind has clearly become a very competitive generation source, and I do have to say we’re pretty confident that the president and the Congress will see their way to extending the credit."
President Barack Obama nominated Baucus to serve as ambassador to China. Sen. Ron Wyden (D-OR), the likely Senate finance committee chairman successor, favors comprehensive reform of the tax code, but said he won't "support just letting renewables just fall off a cliff.”
“It’s the same old story—it’s just another 365 days later,” said Paul J. Gaynor, chief executive of Boston-based First Wind.
Michael Garland, chief executive of Pattern Energy, told The New York Times that many companies are in a scramble, ordering wind turbines before securing building permits or beginning construction while power contracts are still being negotiated. On the spectrum's other end, Vestas has been riding equipment orders for projects in Texas and Oklahoma all the way to what should its second-highest peak in sales since entering the U.S. and Canadian markets in 1981.
“There’s a lot of risk on it that you have to take in order to put that kind of money out,” Gaynor said. “That’s what everybody’s running around trying to figure out what to do.”
Visit EcoWatch’s RENEWABLES page for more related news on this topic.
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By Katherine Kornei
Clear-cutting a forest is relatively easy—just pick a tree and start chopping. But there are benefits to more sophisticated forest management. One technique—which involves repeatedly harvesting smaller trees every 30 or so years but leaving an upper story of larger trees for longer periods (60, 90, or 120 years)—ensures a steady supply of both firewood and construction timber.
A Pattern in the Rings<p>The <a href="https://www.encyclopedia.com/science/dictionaries-thesauruses-pictures-and-press-releases/coppice-standards-0" target="_blank">coppice-with-standards</a> management practice produces a two-story forest, said <a href="https://www.researchgate.net/profile/Bernhard_Muigg" target="_blank">Bernhard Muigg</a>, a dendrochronologist at the University of Freiburg in Germany. "You have an upper story of single trees that are allowed to grow for several understory generations."</p><p>That arrangement imprints a characteristic tree ring pattern in a forest's upper story trees (the "standards"): thick rings indicative of heavy growth, which show up at regular intervals as the surrounding smaller trees are cut down. "The trees are growing faster," said Muigg. "You can really see it with your naked eye."</p><p>Muigg and his collaborators characterized that <a href="https://ltrr.arizona.edu/about/treerings" target="_blank">dendrochronological pattern</a> in 161 oak trees growing in central Germany, one of the few remaining sites in Europe with actively managed coppice-with-standards forests. They found up to nine cycles of heavy growth in the trees, the oldest of which was planted in 1761. The researchers then turned to a historical data set — more than 2,000 oak <a href="https://eos.org/articles/podcast-discovering-europes-history-through-its-timbers" target="_blank" rel="noopener noreferrer">timbers from buildings and archaeological sites</a> in Germany and France dating from between 300 and 2015 — to look for a similar pattern.</p>
A Gap of 500 Years<p>The team found wood with the characteristic coppice-with-standards tree ring pattern dating to as early as the 6th century. That was a surprise, Muigg and his colleagues concluded, because the first mention of this forest management practice in historical documents occurred only roughly 500 years later, in the 13th century.</p><p>It's probable that forest management practices were not well documented prior to the High Middle Ages (1000–1250), the researchers suggested. "Forests are mainly mentioned in the context of royal hunting interests or donations," said Muigg. Dendrochronological studies are particularly important because they can reveal information not captured by a sparse historical record, he added.</p><p>These results were <a href="https://www.nature.com/articles/s41598-020-78933-8" target="_blank">published in December in <em>Scientific Reports</em></a>.</p><p>"It's nice to see the longevity and the history of coppice-with-standards," said <a href="https://www.teagasc.ie/contact/staff-directory/s/ian-short/" target="_blank">Ian Short</a>, a forestry researcher at Teagasc, the Agriculture and Food Development Authority in Ireland, not involved in the research. This technique is valuable because it promotes conservation and habitat biodiversity, Short said. "In the next 10 or 20 years, I think we'll see more coppice-with-standards coming back into production."</p><p>In the future, Muigg and his collaborators hope to analyze a larger sample of historic timbers to trace how the coppice-with-standards practice spread throughout Europe. It will be interesting to understand where this technique originated and how it propagated, said Muigg, and there are plenty of old pieces of wood waiting to be analyzed. "There [are] tons of dendrochronological data."</p><p><em><a href="mailto:firstname.lastname@example.org" target="_blank" rel="noopener noreferrer">Katherine Kornei</a> is a freelance science journalist covering Earth and space science. Her bylines frequently appear in Eos, Science, and The New York Times. Katherine holds a Ph.D. in astronomy from the University of California, Los Angeles.</em></p><p><em>This story originally appeared in <a href="https://eos.org/articles/tree-rings-reveal-how-ancient-forests-were-managed" target="_blank">Eos</a></em> <em>and is republished here as part of Covering Climate Now, a global journalism collaboration strengthening coverage of the climate story.</em></p>
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