By any standard, the Production Tax Credit (PTC) was a great success. It lowered the tax rate for developers that encouraged a boom in wind-farm construction. Although the PTC expired in 2014, construction begun that year could still claim the credit. Activity was vigorous. AWEA says 12,700 MW were under construction last year.
Windpower Engineering & Development Editor Paul Dvorak
Better yet, the PTC partly payed for itself by driving increased economic activity and therefore tax revenue, which combined with the other benefits of wind, such as reduced emissions and more stable electricity prices, made it a good deal.
Wind critics, however, did not see the utility of the PTC. They continuously misrepresented it as a costly handout and presented bogus figures to make their point. Their calculations were based on the erroneous assumption that construction would continue as vigorously without the PTC as with it. Not true. In the years following the Credit’s lapse, wind farm construction nearly came full stop.
So along comes wind energy R&D executive and occasional blogger, Wally Lafferty, to point out that wind farms not built pay no taxes, make no lease payments, and create no jobs. How does that help anyone?
Lafferty also challenged (tinyurl.com/wlafferty) readers to estimate the number of wind turbines not built, the amount of taxes not paid, and the jobs not created, and then decide if retiring the no-cost PTC was a good deal. Let’s try.
AWEA figures from 1999 to 2014, (tinyurl.com/ktouvgw) show that, indeed, when the PTC expired, construction dropped off. For instance, 1999, 2001, 2003, and 2012 were good growth years in the wind industry. The PTC expired at the end of each and construction in the following years plunged on average 83.5%. Last year was also a good year with some 12,700 MW under construction. If the averages hold, (12,700 x 0.835 =) 10,604 MW of wind turbines will not begin constructed in 2015. At about $2 million/MW, that equates to some $21.2 billion not spent in the U.S. economy in just one year.
AWEA further reports that wind turbines amount to 70% of wind farm cost and the remainder goes to construction. Hence, without a PTC ($21.2 billion x 0.30) $6.36 billion will not be spent in U.S. construction projects and its jobs. It’s important to recall that investments would have been made by private companies.
This sad revelation gets sadder when you consider the land-lease payments not made and the jobs not generated. For instance, the Global Wind Energy Council reports that a farmer in Iowa who uses one tenth of a hectare for a wind turbine could earn about $10,000 per year, compared to about $300 using the same area to grow corn for ethanol. Assume an average of 2 MW/turbine to find that (10,604 MW / 2) 5,302 unbuilt turbines will not provide $10,000 each in annual leases. That means the $53 million not paid to land owners in leases. Never mind the taxes not paid to mostly rural communities, their schools, and fire and rescue departments.
And the jobs? The Renewable Energy Policy Project estimates that every 1 MW of installed capacity creates about 4.8 job-years of employment, direct (construction and operations) and indirect (office support). So the 10,604 MW would have created 50,899 job-years of employment. With the expiration of the PTC, that work is not there.
If reading this does not sadden you a little, little will. For goodness sake, bring back the Production Tax Credit and make it permanent. 
— Paul Dvorak
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