Windmill Construction Declines With Changes in ITC
Construction of windmills has fallen off precipitously over the last two years due to several factors. The construction of smaller windmills (less than 1 megawatt) has virtually ceased while the construction of windmills larger than 1 MW has fallen by more than half. The major reason appears to be the transformation in the Investment Tax Credit. Before 2013 the $3000 credit was awarded in cash. After that Congress changed the law and the credit was offered as a tax reduction. This seems to have been enough to half construction, with much of the record 2012 building done in anticipation of the change. The Internal Revenue Service also increased its safety and performance standards for smaller windmills in order to qualify for the ITC. Finally, increased competition from solar panels, which have declined in price, have cut into wind’s advantage. Costs of windmills have not declined in any significant way.