Dive Brief:
- Oklahoma wind developers foresee a hectic 18 months as they race to complete projects before their state tax incentives expire December 31, 2016, The Tulsa World reports. Companies also told the paper they expect uncertainty and a potential crash following the expiration of the incentives.
- Developers' worries are due to two recent bills. SB 498 terminated wind developers’ 5-year property tax exemption and SB 502 ended wind developers’ investment/new jobs tax credit. Both were signed by Gov. Mary Fallin (R) last month. Wind projects currently in production or put into production by December 31, 2016, will retain the full 5-year property tax exemption.
- Fiscal conservatives backed the laws to limit the impact of the incentives on a budget deficit expected to be $611 million for fiscal year 2016. They cost the state almost $49 million in 2014 and were projected to cost $77 million by 2018, according to Oklahoma Tax Commission estimates. Conservatives remain concerned about the $0.005 per kWh zero emissions production tax credit, which is available through 2020.
Dive Insight:
Legislative assent to the laws was produced through a compromise brokered by energy stakeholders in May. The zero emissions production tax credit was left in place to allow Oklahoma wind to remain cost-competitive with wind resources from other states, but it is expected to be a target for budget hawks next year. They consider the incentive “open-ended” because the tax benefit increases as more wind-generated electricity is produced.
“As a negotiated component of the compromise, the legislature will keep the zero emission tax credit active through 2020,” said Wind Coalition Executive Director Jeff Clark.
The wind industry has invested over $6 billion in Oklahoma since 2003, including over $340 million in wages for labor. Wind turbines produce almost 20% of Oklahoma’s electricity.
