Tax credit extension for wind industry brings uncertainty
The legislation is expected to help projects already or soon to be in the pipeline, but it’s unclear if a one-year extension will attract development of new projects or what the impact will be on restoring cut jobs.
Several Midlands wind energy equipment manufacturers announced layoffs last year because the anticipated end of the credit caused a drop in demand. Some wind farm projects were approved contingent on the credit being restored
The industry considers the 2.2-cents per kilowatt tax credit critical to wind being competitive with natural gas and solar energy.
The wind industry employs about 75,000 workers in the United States, and the credit extension could save 37,000 jobs, according to a statement from the American Wind Energy Association. But the group says uncertain federal policies have caused a “boom-bust” cycle for the industry.
As for local jobs prospects, “We don’t have any idea,” said Harold Prior, executive director of the Iowa Wind Energy Association.
“I’m confident as production ramps up, certainly the major component manufacturers will be adding employees,” he said. “Our hope would be we would recover all those 1,000 jobs due to this last round of uncertainty.”
Prior said perhaps the most helpful part of the extension is that the tax credit can now be applied to projects “under construction” — not only ones completed and commissioned, like it was previously. Though “under construction” isn’t yet defined, Prior believes it will give developers more time to establish projects.
“We think this is going to provide a short-term boom for the industry starting about the third quarter of 2013,” he said. “You’ll see them in construction and extending through the end of the in-construction progress period. And, it’ll give us another opportunity to lobby for current production tax credit.”
Prior said the 1,000 wind jobs lost in Iowa, a state considered a national leader in generating wind energy, wasn’t as many as expected. In August, amid layoffs, he estimated that 3,000 of the state’s 7,000 employed in the industry would be cut. The industry employed between 500 and 1,000 Nebraskans in 2011, the latest numbers available, said American Wind Energy Association spokeswomen Ellen Carey.
The impact of layoffs was felt across Iowa: Clipper Windpower, which has a turbine plant in Cedar Rapids, laid off 174 employees companywide, and Anemometry Specialists, an Alta company that builds testing equipment, announced plans to cut at least five of its 31 workers. A $400 million wind farm planned near Estherville in northwest Iowa was delayed after several years of planning.
Siemens Energy Inc., a wind energy equipment manufacturing giant based in Denmark, cut 615 workers, including more than 400 at a Fort Madison, Iowa, wind turbine blade factory. Spokeswoman Monika Wood said in an email that the company was still evaluating the impact of the tax credit extension but called it a positive step.
“We look forward to working with our customers and suppliers on wind power projects that will start construction in 2013,” she said. “However, many wind project developers had already advanced their orders due to the pending expiration, making 2012 a record year in terms of installations.”
Some plants have shifted focus to other areas. For example, Trinity Structural Towers, another manufacturer in Newton, Iowa, shifted its production away from turbine towers to railcars because of the expected drop in new wind farms.
Columbus, Neb.-based wind tower manufacturer Katana Summit announced in September its plans to close unless the company found a buyer, affecting more than 200 employees in Columbus and about 80 at a facility in Ephrata, Wash. Two months later, Valmont Industries of Omaha bought the company and plans to convert it into a steel utility structures manufacturer.
Distefano Tool and Manufacturing in Omaha, which is an arm of Columbus, Neb.-based Behlen Manufacturing, shifted about five of its 10 workers who made wind turbine parts to other areas after Vestas, its biggest customer, announced layoffs in Colorado.
When the wind business regains momentum, Tony Raimondo Jr. of Behlen said his company will have an opportunity to grow its small stake in the renewable energy industry. He hopes to hire five or six more workers to fill the demand in building wind turbine parts.
“It’s probably going to take Vestas six months to ramp back up because, obviously, the projects depend on how quickly they restart,” he said. “That will definitely be a positive effect for our plant in Omaha.”
The tax credit extension also gave the Nebraska Public Power District and Omaha Public Power District more certainty for projects they agreed to late last year that were contingent on the tax credit being extended.
Dave Rich, NPPD’s sustainable energy manager, said the tax credit created a low-cost option for NPPD and its customers. He said more than a half-dozen projects planned in the state were on hold pending the extension.
Now, with the extension, projects like the 200-megawatt capacity Prairie Breeze Wind Farm near Elgin, Neb., and the 75-megawatt capacity Broken Bow II wind farm near Broken Bow, Neb., can proceed.
“We see this (extension) as very important,” OPPD spokesman Mike Jones said. “That (Prairie Breeze) project wouldn’t have gone forward without this.” He noted that the project is still waiting for approval from the Nebraska Power Review Board.
OPPD and NPPD are about halfway toward goals of having 10 percent of their energy mix come from renewable sources by 2020. With the current projects under way, both will meet the goals way ahead of schedule, Rich said, adding that the utilities hope wind development will continue in the state.
“The best opportunity is exporting the rest,” he said.
Rich said that other parts of the United States could use Nebraska’s wind energy and that the state needs to re-evaluate ways it can be competitive in the industry. Nebraska ranks fourth in wind resources, according to the American Wind Energy Association, but as of 2011 ranked 25th in megawatts generated.