Critical Issues in Environmental Taxation series
Edited by Larry Kreiser, Ana Yábar Sterling, Pedro Herrera, Janet E. Milne and Hope Ashiabor
Chapter 11: Taxation and electricity transmission: bringing wind energy onto the grid
Currently, there are significant U.S. federal and state tax incentives for investments in electricity generation from onshore and offshore wind resources. However, the continued expansion of wind energy is equally dependent on major investments in transmission and distribution infrastructure. From a taxation perspective, very little attention has been paid to the level of upgrades and expansion of this electricity delivery infrastructure necessary to integrate these new wind energy projects into the grid. Private spending on U.S. electric transmission and distribution (T & D) infrastructure has fallen far short of growth in demand for nearly 30 years, which has led to inadequate capacity. As much as 30–50 percent of the T & D network is 40–50 years old and many components of the system have useful lives of only 40–50 years. This neglect of transmission places considerable constraints on the amount of wind generation that can be absorbed by the grid. This chapter will address the tax code’s apparent policy disconnect between aggressively promoting electricity generation from wind sources, on the one hand, and not equally recognizing the needs of transmission, on the other hand. This chapter will examine the relative role of federal incentives in encouraging generation and transmission for offshore wind sites.
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