Officials waiting for wind energy tax break

Source: Written by Adam B Sullivan, Iowa City Press-Citizen • Posted: Wednesday, December 5, 2012


 PC photo by Dan Williamson. 6-17-10. People work at the Acciona Windpower plant in West Branch on Thursday, June 17, 2010. / Press-Citizen / Dan Williamson

Stakeholders are hopeful the tax credit will be extended

Insiders are optimistic that Congress will extend wind energy tax breaks, but that doesn’t mean Iowa’s wind industry will see a quick boon.

The federal wind energy production tax credit is set to expire at the end of this year. Wind developers and pro-renewable energy policymakers have called on lawmakers to extend the tax credit, warning that failure to do so will cost thousands of industry jobs, like the estimated 6,000 wind jobs in Iowa. But if and when the tax credit is approved, some say the time it takes to complete wind projects means it could be more than a year before the industry is back on track.

“I don’t have a crystal ball, but I’m hearing it’ll get done and that it’s a high priority,” said Joe Baker, CEO of ACCIONA North America, which operates a wind turbine plant in West Branch. “It would be irresponsible of Congress to let this expire.”

ACCIONA and other wind industry players across the state have helped hoist Iowa to its rank as the country’s second-leading wind producer, trailing only Texas, a state almost five times bigger than Iowa. A U.S. Energy Department report from earlier this year showed about 20 percent of Iowans’ energy comes from wind.

Iowa’s interests in the wind industry has pushed the state’s policymakers to be spokespeople for the federal tax breaks. For instance, Republican Gov. Terry Branstad went to Washington, D.C., last month for a news conference about the tax credit, while U.S. Rep. Dave Loebsack, D-Iowa, delivered a speech on the House floor in support of the extension.

Stakeholders are hopeful the tax credit will be extended, possibly as part of a deal struck to avoid the so-called “fiscal cliff” — tax increases and automatic budget cuts that are scheduled to take hold Jan. 1.

“What we’re hearing from our congressional delegation is that most of them are optimistic that something of a production tax credit will be included either in part of the so-called ‘grand bargain’ or possibly on its own,” said Harold Prior, executive director of the Iowa Wind Energy Association.

Support isn’t unanimous in Iowa, though.

Mark Lucas, Iowa director for conservative group Americans for Prosperity, wrote a letter to Iowa’s congressmen, urging them to oppose the extension.

“Hardworking Iowans deserve an energy policy that is based on market principles, not one that is based on extending handouts to politically connected industries, such as the wind (production tax credit),” Lucas wrote. “ … Targeted subsidies have a disastrous track record in the United States.

Even if advocates get their way and the tax incentive is renewed, the industry could continue to struggle.

Iowa already has lost hundreds of wind energy jobs, with cuts blamed on uncertainty over the wind tax break. Siemens in Fort Madison cut 400 positions this fall, and Cedar Rapids-based Clipper Windpower announced plans to let go more than 100 employees. Acciona eliminated dozens of positions back in 2009 but hasn’t announced any layoff plans this year.

Prior said he’s not sure the state has seen the last of wind layoffs.

“Already, 2013 basically is a lost year for the industry,” Prior said. “We’re not going to see any significant ramp-up of production probably in 2013, simply because of the planning timelines and lead times that are required to develop wind farm products.”

Wind projects are big undertakings. In addition to manufacturing the equipment, companies have regulatory obstacles to navigate, said Andrew Kusiak, a University of Iowa engineering professor who studies wind energy.

“The lower bound is really two years, but it might take up to five because it depends on permission, environmental concerns and things,” Kusiak said.

In Eastern Iowa, ACCIONA has dealt with federal uncertainty by looking outside the United States to do business. The company recently closed a major deal with a foreign costumer and has another in the works.

“Until we get some line of sight on the tax credit and regulatory environment, we’ll continue to pursue business outside,” Baker said.

Kusiak, who was born in Europe and worked several years in Canada, said while U.S. manufacturers face uncertainty over federal support, energy industries in other Western countries are more stable.

“They don’t like uncertainty. Now we are running out, so the industry basically has no patience. They are anxious. They slow down developing,” Kusiak said. “The government (in other countries) basically has more control over energy, so their energy policy is clearer than in the U.S.”