Federal Production Tax Credit expires

Wind energy projects face uncertainty as federal initiative comes to an end

The Production Tax Credit, an incentive from the U.S. government designed to support wind energy projects, has finally expired. For the past year, the future of the Production Tax Credit has been shrouded in uncertainty. At the end of 2012, federal lawmakers provided the initiative with a year-long extension, ensuring that it would remain active throughout 2013. With 2013 now over, lawmakers have opted not to prolong the lifetime of the federal initiative further.

Expiration of tax credit creates unease among investors

The Production Tax Credit is behind most of the country's wind energy projects. It has provided these projects with financial backing and tax breaks and is one of the reasons that the U.S. has become a favorable wind market for energy developers. The existence of the initiative did not only provide financial support to energy developers, it also made wind projects more attractive to private investors. Because these projects were backed by the federal government, investors felt comfortable in supporting these projects. Now that the Production Tax Credit has expired, investments may begin to diminish.

Budget deal provides some tax breaks for wind projects

In December of 2013, a new budget deal was approved by Congress. While this deal did not include a provision concerning the Production Tax Credit, it did make a change to federal tax law. This change allows energy developers to continue receiving tax breaks for their projects if they began construction on December 31, 2013. This is meant to offer the wind industry with some flexibility and reduce the impact of the loss of the Production Tax Credit.

US remains a prominent wind energy market

While the federal initiative is no longer in play, the U.S. remains one of the leaders of wind energy. States like Oklahoma, which have access to vast expanses of open land, are still very popular homes for wind projects. Oklahoma alone announced more than 1,500 megawatts of new wind energy capacity in 2013. Iowa has also established a strong presence in the wind sector and offshore wind energy systems have taken root along the East Coast in 2013.