WIND IN THE SEQUESTRATION

How Sequestration Will Impact Wind Energy

Laura DiMugno, 7 March 2013 (North American Windpower)

“The widespread government spending cuts that were triggered on March 1 will impact nearly every sector of the U.S. economy, including wind energy…[S]equestration will slash the government's budget for renewable energy, including in the areas of finance, research and development, and even regulatory matters…

“U.S. Department of the Interior (DOI) Secretary Ken Salazar warned that the sequester would delay the already-lengthy process of issuing permits for new energy projects…slow the environmental-review process for projects sited on public lands…[and] delay the studies needed to jump-start U.S. offshore wind energy development...[T]he DOI’s budget will be reduced by $883 million for the remainder of the fiscal year, which ends Sept. 30…It is also possible that there will be layoffs [furloughs and/or pay cuts] within the DOI…”

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“…[W]ithin the Department of Energy (DOE), $91 million will be cut from the Office of Energy Efficiency and Renewable Energy’s $1.8 billion budget, and the Advanced Research Projects Agency - Energy will take a $14 million haircut off its $277 million allocation…The DOE’s loan-guarantee program will also take a 5% hit, reducing its budget by $2 million through the end of the fiscal year…Sequestration will also deal a blow to the Treasury Department’s renewable energy programs, including the Section 1603 cash-grant program, which allows companies to claim a 30% cash grant in lieu of the investment tax credit (ITC)…

“…[C]ash grants awarded between March 1 and Sept. 30 will be reduced by 8.7%...[T]he sequestration rate could change after Sept. 30…[F]or a wind project to qualify for a cash grant, it must have started construction before Dec. 31, 2011, and have been completed before Dec. 31, 2012…[so] cuts to the Section 1603 program will have a more severe impact on solar energy companies, which have more of a preference for the ITC…[This could shift tax equity invesotors away from wind]…”

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