Faced with the prospect of being saddled with wind energy assets unable to be financed, many wind developers abruptly halted projects that could not be completed in time to qualify for the wind energy production tax credit (PTC), which was slated to expire at the end of last year.
However, in looking over its portfolio, Boston-based developer First Wind realized that several of its projects were in the latter stages of development and were too important to merely be put on hold, explains Matt Kearns, First Wind's vice president of development.
‘By anticipating an extension, we took a little bit of a risk,’ he admits.
Fortunately, the PTC was extended for one year, and now it appears the developer's gamble paid off.
‘By continuing to develop projects – when others stopped – we are well positioned to grow,’ Kearns says, adding that First Wind expects to begin construction on 500 MW this year and plans to grow its portfolio by 50% in the future.
The PTC extension allows First Wind the time necessary to begin building projects, such as Oakfield, a 150 MW wind farm in Maine that the developer deemed too important to shelve.
‘We've been working on Oakfield since 2008, and the project had been through several iterations,’ Kearns explains, adding that wind energy opponents appealed the project's building permit issued by Maine's Department of Environmental Protection.
However, Maine's Supreme Judicial Court recently upheld the building permit, thus allowing First Wind to begin construction on the project this year.
Kearns also cites the company's 48 MW Bowers Wind Project as a facility that was aided by the PTC extension. The project, located in Lincoln, Maine, was three years in the making, he says.
Nonetheless, 2012 was marked by tough decisions, Kearns admits.
‘Based on a business case, we had to make these hard choices,’ he recalls. ‘These projects could have been put into cold storage.’
The PTC extension means First Wind's two Maine wind farms will begin construction this year. In addition, the company could break ground on late-stage projects in Oregon, Washington, Idaho, Utah and Hawaii by year-end.
Notably, the PTC's renewal provides clarity and direction not only for developers, such as First Wind, but also for their suppliers.
‘An extension means the difference between businesses getting the work or looking at laying off employees,’ Kearns says, noting that such work can take many forms.
‘I'm talking about things like the final designs for engineering you wouldn't do unless you were going to take a project out for bid,’ he adds.
Before First Wind can begin further development, it must await guidance from the U.S. Treasury Department on what it means to begin construction – not that it will deter First Wind, which spent much of last year toiling behind the scenes.
‘A lot of wind development is about momentum,’ Kearns says. ‘We try to take the little initial steps so that when decisions are made, we'll be ready.’
Photo: First Wind's 40 MW Sheffield wind project, located in Vermont
Credit: First Wind