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While the PTC is often sited as the main subsidy (especially for wind sites with 8 m/s hub height average wind speeds), the wind industry also gets by on a couple of others. These are the sale of REC's (Renewable Energy Credits, alias Green Tags) and the MACRS (Modified Accelerated Credit Recovery System). Basically, the MACRS allows the wind turbine capital (the complete installed cost, not just the turbine, but not including any transmission line stuff) to be fully depreciated in 6 years, with 52% of this in the initial 2 years. Adding in interest on the loan for the project, wind turbine achieve huge "paper losses" in the initial 5 years, and these losses can be deducted from the taxable income of the investors, who for these projects, are typically in the 35% tax bracket. The MACRS deductions work for any kind of income; the PTC credits only work for passive (i.e. rental) income.
REC prices vary by region, being close to zip in the midwest to ~ 4 c/kw-hr in some parts of the Northeast. Last year the NY State government auctioned off a large blok at 1.5 c/kw-hr; this gets added on to the price of the electricity. In some states like NY, the electricity market is a bit like a semi-rigged casino - prices for electricity in future times are unknown, but the BET is that they will go up. Thus, a 330 MW wind farm (done partly by Goldman Sachs) was set up in NY strictly on a gambling basis - i.e. merchant price. Odds are, that was a good bet. In the midwest, where most power is still made via coal, that would not work.
So, to wrap it up, the PTC is a 2 c/kw-hr tax credit. It's value to really wealthy investors can be up to 2.6 c/kw-hr, or so I have been told. The MACRS deduction works out to be worth about 2 to 2.5 c/kw-hr over a 10 year term - though it is returned in a (mostly) 5 year term - so this has even more value.
Finally, almost all of the benefits from wind turbines in the initial 10 years go to the wealthiest of the wealthy - really rich people and corporations with passive income, and who would otherwise have to pay large amounts of taxes. There is a bit of a gamble here, too, because the financing of these projects assumes that the owners/investors WILL have huge taxable incomes for up to 10 years in the future. This system effectively excludes 98% of the US from investing in wind turbine projects via pooled resources. However, with some special economic and legal manuvers, some community/small investor ownership is possible in projects after the initial 10 year period.
It's a crazy way to finance wind turbines, but it is better than nothing. The German Feed In Law seems to be orders of magnitudes more logical and effective. Odds are, if that were in place, 2007 installed capacity would have been equal to that of the entire world for 2007, just in the US (~ 15 GW), and it would be climbing at ~ a 50% annual rate.
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