Blown away

The effervescence of the wind industry last year, however, was partly because the main federal tax credit for wind power was going to expire in December, and companies raced to qualify before the deadline. The Production Tax Credit (PTC) gave producers 2.2 cents per kilowatt-hour for electricity generated during the first ten years of a turbine’s life. In January another year of the PTC, worth $12 billion, was wrung out of the deal by which the federal government avoided the fiscal cliff, and this spurred the new investments in Iowa.

Questions, though, are being asked about this subsidy. Some power and utility companies whose margins are being squeezed by cheap wind power would like to see the PTC eliminated. Energy companies that use fossil fuels are griping too, perhaps forgetting how handsomely they have been subsidised in the past. But even the wind industry wonders whether a credit that expires every few years, causing cycles of boom and bust, is helpful.

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