In February 2009 the American “Recovery and Reinvestment Act” was enacted by the US congress. 40 billion dollars were allocated for the development of renewable energy, for various initiatives such as tax credits for renewable energy projects. However the act did not include details about how these 40 billion dollars should promote the development of renewable energy.
It was not until august 2009, six months later, that the details of the grant were released. The act among other things provides a 30 percent tax credit for investment in new renewable energy manufacturing facilities as well as for facilities that are either renovated or expanded. The tax credit only applies to the companies that manufacture equipment such as turbines and boilers to generate renewable energy and not to the utilities making use of the equipment.
However owing to the financial crisis developers within renewable energy is no longer as profitable and therefore do not have as high income taxes to pay and consequently the tax incentives currently become less attractive. As a result the act also contains a number of grants taken in lieu of tax credits for renewable energy projects to boost the growth of the industry. Nearly 500 million dollars has already been given in grants for 10 wind projects in Maine, Minnesota, New York, Oregon, Pennsylvania and Texas.
Enormous growth for renewable energy
Renewable energy has experienced enormous growth on the US market in recent years. This is especially true for the wind industry, which on average has grown 32 percent annually for the past five years. 4000 MW of new wind power capacity was installed in the US for the first six months of 2009, compared to 2900 MW for the same period in 2008. As the installations of new wind capacity have been in the pipeline for more than a year, the increase in wind capacity in 2009 is not an evidence of the wind industry being unaffected by the financial crisis. Just like any other industry the wind industry has been affected by a decrease in orders and consequently less activity in the whole supply chain to the industry.
However AWEA, the American wind energy association, expects that with the improved incentives for making investments the orders will start to rise again, which will boost employment and investments in the industry. The impact of the financial crisis will thus be minimized and the wind industry is expected to become a platform for the creation of new jobs.
14 September 2009