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Tax credit extension boosts Mass. wind industry

The extension of wind energy tax credits — passed as part of the fiscal cliff deal — includes a key change that will make it easier for wind ­developers in Massachusetts and elsewhere to obtain what are viewed as crucial incentives for a burgeoning industry.

In Massachusetts, the tax credits have helped spur new wind development. Last year, for example, at least half a dozen projects — including the largest in the state, the Hoosac wind farm in the towns of Florida and Monroe — doubled the state’s wind energy generated capacity over the last decade to 99 megawatts, or enough to power at least 26,000 homes.

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Legislation passed by Congress on Tuesday ­extended two programs that support wind development, a growing segment of the energy mix in Massachusetts and the nation as policy makers seek clean energy sources to help combat climate change.

The production tax credit pays eligible projects 2.2 cents per kilowatt hour for the first 10 years of production, making the energy competitive with electricity generated by natural gas. The investment tax credit pays 30 percent of costs for small, community wind farms and offshore wind projects.

Lawmakers tweaked the eligibility requirements so that projects that begin construction in 2013 may apply for the incentives. Previously, projects had to be generating power by year’s end to qualify. That was an uncertain prospect that made it more difficult to attract financing, given the length of time — 18 to 24 months — and complexity of building a wind farm.

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The change, state officials and wind energy developers said, should boost development in Massachusetts and elsewhere because it provides investors with the assurance they need to back wind projects.

“The financing community, the banks, need to have some consistency,” said the state’s energy and environmental affairs secretary, Richard K. Sullivan Jr. “They need to know that they’re going to have these credits.”

The language change means Cape Wind will qualify for tax credits, if the controversial 420 megawatt project starts construction in the waters off Cape Cod this year as expected. Project spokesman Mark Rodgers declined to comment on Cape Wind specifically, but said the tax credits’ renewal will help to expand wind energy development — onshore and off.

“The United States can maximize the energy, economic and environmental benefits wind power can provide by expanding onshore wind while also launching a domestic offshore wind industry,” Rodgers said in a statement.

Congress has allowed wind energy tax credits to expire in the past, and each time it has, wind projects have stalled and workers have lost jobs. The American Wind Energy Association, estimated that 37,000 jobs could have been lost this year if Congress had not included the credits in the fiscal cliff deal.

Many believe that allowing developers to claim the credit by simply beginning construction was essential to any sort of wind development this year, given that the credit was extended at the last minute. Without the new language, few would have been able to start and finish projects soon enough to take advantage of the incentives.

“It would have made 2013 a very dreary one, there’s no doubt about it,” said Paul Gaynor, chief executive of Boston-based First Wind, which has developed nearly 1,000 megawatts worth of wind projects in half a dozen states.

Now, however, Gaynor and his staff of 175 employees are gearing up for one of their busiest years, he said.

”I sent around an all-employee call this morning that said, ‘Fasten your seat belts, it’s going to be a pretty productive year,’ ” Gaynor said.

Erin Ailworth can be reached at eailworth@globe.com. Follow her on Twitter @ailworth.
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