In previous years, the projects had to be in commercial operation by New Year’s Eve. This year, they need only have begun.
      
Though the wind industry has grown enormously since the tax credit began in the 1990s, it has followed a boom-and-bust cycle driven by the fate of the subsidy. Over the years, Congress has allowed it to expire several times before renewing it, according to the American Wind Energy Association, a trade group. With each expiration, new installations dropped sharply.
      
That happened in late 2012, when manufacturing and new project starts nearly came to a standstill, only to pick up again after Congress revived the credit, called the Production Tax Credit, in January for a year. The renewal was intended as a temporary fix to keep business going as lawmakers overhauled the tax code.
 
Developers are unlikely to start any projects without a credit in place because they cannot compete with power generation from other sources like cheap natural gas. Projects that do not have the P.T.C. attached to them are probably difficult to justify economically.              

Under a recent agreement, among the largest in land-based wind power, MidAmerican will buy 448 turbines from Siemens. The turbines, which Siemens will maintain for the first 15 years of operations, are to be installed in five projects in Iowa. The company has also agreed to make turbines for Cape Wind, which could become the country’s first offshore wind farm. More than a decade in the making, it has faced lawsuits and stiff opposition from Cape Cod residents who say the spinning machines will spoil pristine views and raise the price of electricity.
 
Opponents of the credit are mostly generators of other forms of energy, who say that by subsidizing wind, the government is adding supply to the market in a way that depresses prices for electricity, cutting the revenues of other generators and, in some cases, driving them out of business.
 
The production tax credit for wind energy has passionate opponents in the nuclear industry. This is because in about half the country, electrically speaking, the wholesale price of electricity is set by auction, and when there is oversupply, prices drop.       
This is a problem for generators that run on coal or natural gas, but within minutes or hours they can reduce their output. Reactors, however, cannot easily lower their power output. Thus, at hours when wholesale electricity prices go negative, operators often end up paying to generate electricity.
      
At Exelon, the country’s largest civilian reactor operator, executives say one of its Illinois plants sees negative prices during 14 percent of the off-peak hours. And some of its plants could be shut as uncompetitive next year, not because of their true production costs, but because of the wind subsidy, the company argues. Exelon was a member of the American Wind Energy Association, the industry’s trade group, but was expelled in September 2012 because it opposed extension of the production tax credit.
      
Wind developers argue that all forms of energy receive government support and that the credit helps level the playing field. Their main focus now is the familiar race to make sure their projects qualify while the credit is still available.
 
This year’s renewal does not require projects to go into production until the end of 2016, but they must either be in continuous construction or have spent at least 5 percent of the total costs this year. Project costs can top $100 million.  Companies are frantically reordering their usual processes, with some ordering turbines without permits to build or starting construction while still negotiating power contracts.  (NYT, 10/25/2013)