Despite the best efforts of the renewable energy industry, its lobbyists and supporting politicians, the payroll tax cut extension Congress is finalizing this week will not include a key subsidy for renewable energy.

Updated by Staff

As most of our readers know, the production tax credit is set to expire at the end of the year, leaving project developers, utilities and component suppliers in limbo when they consider what their order books or power procurement plans will look like in 2013.

In fact, the bill before Congress mainly focuses on the tax cut, unemployment benefits extension and doctor Medicare reimbursements. It look as though few, if any, additional provisions will be included.

A collapse of the project market in an already constrained finance environment, is giving the industry pause as it considcrs the supply of tax equity.

“It looks like we’re not going to succeed, despite a valiant effort, as we see the legislation dealing with these tax extenders very narrowly focused,” said Todd Foley, senior vice president for policy & government relations, American Council on Renewable Energy, told Bill Opalka of Energy Central.

While the tax credit of 2.2 cents per kilowatt-hour for projects put into service before year’s end doesn’t lapse until December 31, as a practical matter, projects not under construction within the next month or so will not be completed in time to qualify.

“We’ve done some market analysis and there is a cliff, especially for wind after March,” Foley said. “Our research shows there may be a 52 percent decline because of this uncertainty.”

Even a less ambitious strategy of reviving the 1603 cash grants in lieu of the tax credit was presented but failed to make headway in Congress. The American Wind Energy Association is hoping to extend the PTC this quarter,but given the current political climate in this election year, it may be whistling in the wind. 

“There is growing bipartisan support and acknowledgement that the PTC needs to be extended and there is growing interest in 1603 as people understand there is a real market problem,” Foley said, hopefully.

Right now, there is little optimism in the board rooms of wind industry vendors. Vestas may slash 1,600 manufacturing jobs next year and Iberdrola Renewables has reduced staff and said it will suspend planning for next year’s installations.