Small windfarms need tax credit
DES MOINES, Iowa, US, May 11, 2005 (Refocus Weekly)
Large windfarms have produced an economic benefit to the state of Iowa, but smaller wind projects also need a tax credit.
Landowners who install one or two turbines are not large enough to benefit
from the federal tax credit for wind in the U.S., says a report by the Iowa
Policy Project. The research group says the credit reduces the amount of tax
owed for generating electricity from wind, but notes that smaller wind projects
do not have enough tax liability to claim the credit.
“Iowa does pretty well in producing wind energy but, in order to produce
small-scale locally owned wind, it's often necessary to have (state)
incentives,” explains Teresa Welsh. Iowa ranks in tenth spot for wind energy
potential but is third in terms of output, according to the American Wind Energy
Association, but AWEA does not have firm data on smaller wind projects.
Iowa has 745 turbines with a total installed capacity of 635 MW. State
politicians are considering a 1.5¢/kWh tax credit, and the proposal passed the
Senate unopposed and now is before the House of Representatives.
“Megawatt for megawatt, small locally-owned wind projects deliver greater
economic benefits in Iowa communities than do large projects,” the report
explains. More dollars are more likely to stay in the local economy when wind
projects are small-scale and owned by community members.
“Iowa has done good things to advance wind power, but it is important for the
state to stay competitive with policies that assure small-scale, locally owned
projects are feasible,” says David Osterberg of the IPP.
For every megawatt of large-scale wind capacity owned by out-of-state companies,
$17,300 stays in the community and state each year, while the level is $167,200
for smaller sites owned by local people, the report details.
“As Iowa continues to promote wind energy, it is essential to consider the
benefits of doing this in a manner that doesn't let much needed dollars blow out
of our economy,” adds Welsh. If the wind potential in Iowa were fully
utilized, it would generate 4.8 times more energy than residents consume.
The federal definition of small-scale wind is capacity below 20 MW, while the
Iowa Utilities Board describes small-scale generation as 500 kW or less. The
proposed Senate legislation which would establish a renewable energy tax credit
defines small wind as a system with less than 5 MW of nameplate capacity.
In 2002, the installed capacity of wind turbines smaller than 100kW was 15 to 18
MW, and farmer-owned turbines account for less than 1% of the utility-scale wind
capacity. In Iowa, the largest share of capacity from small wind systems is held
by public schools, with eight schools hosting ten wind turbines ranging in size
from 50 kW to 750 kW.
“Although leasing land for the siting of a turbine to an energy company
provides landowners with a guaranteed income, ownership of the wind turbine by
the landowner can provide a much greater return,” it adds. “While hosting
wind turbines can provide a much-needed boost in income to farmers struggling to
maintain their livelihood, the lease payments made to farmers by commercial wind
project developers typically pale in comparison to the amount of income the
farmer could earn if he instead owned the turbine himself, or in conjunction
with other members of his local community.”
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