Wind energy generating capacity is expected to increase at near-record levels in 2019 and 2020, according to the U.S. Energy Information Administration (EIA). Through June, 3.7 gigawatts of wind capacity had been added in the United States, and another 8.5 gigawatts is expected to start operating by the end of 2019. Also, 14.3 gigawatts of capacity is expected to be added in 2020.
In 2012, a record of 13.3 gigawatts of wind capacity was added. Tax incentives have contributed to additions in wind capacity, and the U.S. production tax credit had been set to end in 2012 but was later renewed retroactively. The credit gives operators a tax credit per kilowatt-hour of renewable electricity generated for the first 10 years a facility is in operation. The credit is being phased out, and this has led to a rise in wind capacity additions in 2019.
The tax credit is 2.3 cents per kilowatt-hour for the first 10 years of production, and as a result of the phase-out, the credit decreases 20% annually from 2017 through 2019. Wind generating facilities that start construction after the end of 2020 cannot claim the credit.
Wind projects receive the credit based on the year construction begins or when the constructed facility starts operating. If the previous, operators must have spent 5% of the total project cost in the year the credit is claimed. The project must be completed in no more than four years after the year in which construction started.
Wind projects must start operating by December 2020 to receive the full tax credit for 2016. About half the amount of capacity set to be completed in 2020 is expected to start operating in December 2020, according to the EIA.
Wind energy is an important part of American Electric Power’s plans to reduce carbon dioxide emissions. The parent company of Southwest Electric Power Co. looks to add more than 8,600 megawatts of new wind and solar generation by 2030. The company is seeking regulatory approval to add 1,485 megawatts of new wind generation to serve customers in Arkansas, Louisiana, Oklahoma and Texas. The company added 1,302 megawatts of renewable energy to its portfolio this year.