Production Tax Credit (PTC)

Policy recommendation

The renewable energy production tax credit (PTC), a credit of 2.1 cents per kilowatt-hour, is the primary federal incentive for wind energy and has been essential to the industry’s growth. The wind energy industry was facing two troubles regarding the PTC.  The credit was continually extended for only one-year and two-year terms, discouraging companies from making long-term, sizeable investments in wind power manufacturing and development.  Also, in the adverse financial climate, where demand for tax credits is limited, the PTC was providing little incentive to spur wind energy development.

The economic stimulus bill (The American Recovery and Reinvestment Act of 2009), signed into law by President Obama on February 17th, 2009, extended and repaired the PTC.  The PTC is now available through December 31, 2012.  Additionally, wind project developers can choose to receive a 30% investment tax credit (ITC) in place of the PTC for facilities placed in service in 2009 and 2010, and also for facilities placed in service before 2013 if construction begins before the end of 2010.  The ITC then qualifies to be converted to a grant from the Department of Treasury.  The Treasury Department must pay the grant within 60 days of an application being submitted.

The Treasury Department grant program has yet to be fully implemented.  New developments will be posted here, and also at www.treasury.gov/recovery.

“I will also extend the Production Tax Credit for five years to encourage the production of renewable energy like wind power… It was because of this credit that wind power grew 45% last year, the largest growth in history.”

Barack Obama, August 4, 2008, Lansing, Michigan