Two groups who backed President Obama’s reelection bid — green energy and Hollywood — were each rewarded for their support this week with provisions contained within the so-called “fiscal cliff” bill.
Wind energy tax credit:
One item within the bill that was hurriedly passed in the wee hours — presumedly without reading it — was a one-year extension of a tax credit for wind energy. For new installations, it gives the industry a 2.2-cent credit per kilowatt-hour of energy produced for the first 10 years the installation is in operation.
San Diego-based wind developer Florian Zerhusen, CEO of WKN USA, emphasized just how much the industry relies on the credit to stay in business.
“Just simply, 30 percent of the value of a project is derived from the tax credit,” he said. “That’s what makes it so important, or you’re making too low a return.”
According to K. Kaufmann, writing for the desert Sun:
In the Coachella Valley, uncertainty over the credit has meant slow progress on new development as well as necessary upgrades, or repowering, of hundreds of aging turbines in the San Gorgonio Pass, still considered one of the best places for wind energy in the state.
The estimated 2,500 turbines in the pass, 1,080 on public land, pumped out about 800 gigawatt-hours of power in 2011. That electricity accounted for about 5 percent of Southern California Edison’s renewable power for the year.
Given that one gigawatt-hour equals one million kilowatt-hours, the tax credit amounts to $17.6 million annually for the Coachella Valley project alone.
Motion picture industry tax incentive:
In a related story, Breitbart.com reported an extension of a tax incentive favoring the film industry.
Section 317 of the freshly approved legislation includes an extension for “special expensing rules for certain film and television productions.” Congress first enacted production tax incentives favorable to the domestic entertainment industry in 2004, and extended them in 2008, but the deal was meant to expire in 2011.
The Breitbart article noted that, “Hollywood players routinely beg the government to raise their taxes so they can pay their “fair share.”
It’s good to have friends in high places.