The American Wind Energy Association’s second quarter report reveals that just 1.6 MW have been commissioned in the first six months of this year. That’s right, 1.6 MW – as in a single GE wind turbine located on a North Dakota college campus.
With the late extension of the production tax credit (PTC), most everyone figured 2013 installations to be lower than what the industry has become accustomed to. But this weak? Where are all the wind projects?
The paucity of completed projects makes me long for the salad days of 2010, when cocktail banter at industry functions was marked as much by bragawatts as it was by megawatts. For those unfamiliar, a bragawatt is wind developer speak for the public boasting of one’s project portfolio, typically described as “under development,” often with scant evidence suggesting that said project gets built.
Despite the pullback, developers are talking, at least privately.
According to several industry watchers, wind developers are trying to negotiate with original equipment manufacturers regarding the PTC’s new stipulations.
To qualify for the PTC, the IRS says that renewable energy projects starting construction in 2013 must be able to demonstrate “significant work of a physical nature” or show that 5% of their costs have been incurred by the end of this year.
Further, the new rules are written as such that developers will need to show signed contracts with component manufacturers no later than this fall to satisfy the IRS. Complicating matters, developers trying to meet this test also must show that their post-2013 development efforts are continuous.
“Developers are trying to place as large an order as they can afford,” explains John Marciano, a partner at law firm Chadbourne & Parke. The hard part for developers, he says, will be demonstrating that the project has been continuously developed to the IRS’ satisfaction.
“The IRS guidance is not particularly clear on what it means to have continuous development,” Marciano says, adding that many developers have been reluctant to spend large sums of money for fear they may inadvertently fail the test.
Hopefully, the developer-supplier negotiations we’ve been hearing about evolve into contracts for wind projects worth writing about. It has been quiet this summer. So quiet, in fact, that you can barely hear some developers boasting of their mythical projects. w