Minnesota wind farm developers could decrease the number of projects they are developing if Congress does not extend the renewable energy production tax credit (PTC) past the end of 2008.

For Minneapolis-based National Wind LLC alone, death of the tax credit would mean the death of ¨C or at least delays in ¨C wind-farm development projects worth about $820 million.  

Wind farm developers are wary of unwillingness by Congress to extend the tax credit of 2 cents per kilowatt of electricity generated, and so are scrambling to complete wind energy developments before December 31 to be eligible for 10 more years of PTC benefits.

The credit plays a major role in supporting a financial plan for developing a wind farm.

Tryg Sarsland, vice president of project financing for National Wind, said Thursday the PTC would provide between $60 million and $80 million for a 100-megawatt wind development, or about one-third the project¡¯s cost.

¡°We do have several projects that are expected to be completed after 2008,¡± said Leon Steinberg, chief executive officer for National Wind.
¡°If the PTC was not extended into 2009 ¡­ those projects would no longer be feasible,¡± he said.

Steinberg and Sarsland estimated the value of those projects that would no longer be feasible at about $820 million.

Financing for wind farms, which cost about $2 million per megawatt to develop and hook to the electric grid, is much like qualifying for a home mortgage.

Without a steady stream of tax credit income, reservations for wind turbines and other wind-farm-related materials could be cut off if Congress does not extend the tax, which applies to wind and a variety of other energy generated from renewable sources.

Wind farms located near Minnesota¡¯s south and western borders generate 1,399 megawatts of electricity, ranking the Land of 10,000 Lakes third among states in wind energy production, according to the American Wind Energy Association (AWEA).

On Thursday, General Electrics¡¯ GE Energy Financial Services announced results of a study that indicates that tax credits for wind energy projects more than pay for themselves.

That study, released at the American Council on Renewable Energy¡¯s Renewable Energy Finance Forum in New York, indicates that wind farms built in 2007 with the PTC in effect represent a ¡°net value benefit¡± of $250 million to the U.S. Treasury.

¡°The booming wind energy sector is a bright spot in a tough economy,¡± Randall Swisher, executive director of the Washington, D.C.-based AWEA, said in prepared remarks.

¡°Congress¡¯ continuing delay [in extending the credit] could derail the wind energy industry at the worst possible time for our economy, placing 76,000 jobs and more than $11.5 billion in investment at risk.

This study makes it crystal clear that the production tax credit is an incentive, not a subsidy, and should be extended immediately,¡± Swisher said.

In National Wind¡¯s case, the company is hurrying to complete the first phase of its M-Power LLC wind development in eastern North Dakota by the end of 2008.

The first phase of that development, located north of Fargo, N.D., in Griggs and Steele counties, is expected to generate 150 megawatts of electricity.

A core group of U.S. Senators has resisted voting for a tax incentive package that includes the PTC, which gave renewable energy firms a total of $2.8 billion between 2002 and 2007.

U.S. Sen. Norm Coleman, R-St. Paul, has changed his position on the tax bill after being reassured by Democratic Senate leaders that tax relief for middle-class families would be included in the bill, according to Leroy Coleman, a spokesman for Sen. Coleman.

Then there is the question of carbon emissions, which Congress has yet to take on in earnest.

¡°What none of this really accounts for is the cost of carbon and the affect on our world,¡± Steinberg said. ¡°A coal plant produces carbon but a wind farm does not. And we bear that indirectly.¡±