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WIND
Energy |
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 Section
45 Wind Energy Production Tax Credit
The Energy Policy Act of 1992 created a production tax credit for
the production of renewable energy sources. Codified as Section 45
of the Internal Revenue Code, facilities that produce wind-generated
electricity qualify for a production tax credit which initially provided
1.5 centers per kilowatt-hour. The program has been extended in the
past and it is expected that it will again be extended beyond its
present expiration date.
The tax credit can be claimed by a taxpayer who owns and operates
an eligible facility and who sells the generated power to an unrelated
party. The qualified facility will receive a tax credit for the first
10 years of the facilities operation. Additionally, the owner of the
facility receives benefits in the form of tax losses (depreciation,
interest & operating expenses) and cash flows following the payoff
of the initial debt. As provided by Congress in March 2002, equipment
placed in service after Sept. 11, 2001 receives a 30% depreciation
bonus, further increasing the return for an investor.
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