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Wind projects can benefit from two aspects of the Federal tax code.
The federal production tax credit (PTC) is intended to provide wind generators with incentives similar to those received by other electricity producers. This inflation-adjusted tax credit is currently set at 2.0 cents per kWh of generation over the first ten years of a project's life for projects reaching commercial operation prior to the credit's expiration date. In December 2006, Congress extended the PTC through December 31, 2008. Historically the PTC has been renewed only for short durations (one to two years) and often retroactively after having expired. This uncertainty has impeded the wind industry's investment in equipment production capacity, while also inducing scarcity-driven equipment and installation price increases as project developers race to beat the PTC expiration deadline. Extension proposals ranging from three to five years in duration are under consideration by Congress in the 2007 legislative session.
Owners of wind projects who pay federal income taxes are able to take accelerated depreciation, rather than straight-line depreciation, of their capital investments in calculating their tax liability, effectively deferring tax liabilities.
State Tax Incentives
The following New England states offer tax incentives to owners of large and/or small wind generation equipment.
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