I have been trying to figure out what principle underlies your opposition to encouraging the development of clean, renewable energy sources that create American jobs and could help us avoid the planetary calamity of global warming. Are you really worried about budget deficits? While railing against modest incentives for wind energy, you say nothing of the more than $113 billion in federal subsidies that will go to fossil-fuel industries over the next 10 years alone. These subsidies benefit some of the wealthiest corporations on the planet, including the five largest oil corporations, which made a combined profit of $1 trillion over the last decade.
The Obama administration today said it is gauging industry interest in developing wind power in a 127-square-mile area off the coast of New York, where a state power organization has proposed building a 350-megawatt wind farm. If no other parties are interested in developing the area, the Interior Department said it would consider granting the New York Power Authority the exclusive right to build a project.
Despite their frustration with Congress, some farmers are relieved, but not because of the money they make on their crops. In part of the fiscal cliff deal, Congress extended a tax credit that benefits the wind energy industry. And that is today’s bottom-line in business. The landscapes of Midwestern farm states have changed dramatically, due to wind power. As NPR’s Sonari Glinton reports, wind has also changed the landscape economically and politically.
In the last-minute tax maneuvering in Congress this week, wind power came out well. Wind not only got an extension of its tax credit in the federal budget compromise, but the rules were also restructured: while the extension runs for only one year, the nature of the deadline has changed. Projects do not need to be finished and feeding electricity to the grid by next New Year’s Eve; construction only needs to be started.
A one year extension of the U.S. tax credit for wind power, part of the budget compromise Congress passed Tuesday, will save as many as 37,000 jobs in an industry that is expected to stall this year, the American Wind Energy Association estimates. The production tax credit was due to expire at the end of 2012. It will cover all wind projects that start construction in 2013.
The one-year extension to the wind production tax credit delivers a big win for the industry that had made winning a PTC lifeline its top priority. The broad fiscal cliff deal included language extending the PTC deadline through the end of this year and modifying its requirements to allow projects to be eligible for the credit as long as construction begins by the deadline — a change that also benefits geothermal, hydropower, biomass and waste-to-energy developers that can claim the credit. The new language means, in effect, that wind developers have more certainty as they plan projects that would go into service over the next two years, because of the planning horizon inherent in such projects. Before the change, projects had to be “in service” and sending electricity to the grid before developers could claim the credit.
While the eleventh-hour PTC extension will help keep the wind energy industry afloat, it did not ameliorate damage already done to an industry where investment activity shrank from robust levels at the end of 2011 to a near standstill by early December, when hopes for a stand-alone extension in the increasingly fractious Congress were nearly extinguished. In the ensuing months, dozens of wind power companies, including turbine, blade and tower manufacturers, scaled back or even shuttered operations in the United States in anticipation of the expiring tax credit. Vestas, the world’s largest turbine manufacturer, said yesterday that it expected a significant dropoff in wind turbine installations in 2013, even with the PTC extension. However, the industry will be stronger than it would have been if Congress had let the subsidy expire, the Danish company said.
Bledsoe noted that Sens. Ron Wyden (D-Ore.) and Lisa Murkowski (R-Alaska), who will be leading the Senate Energy and Natural Resources Committee in the 113th Congress, have repeatedly stressed their close personal friendship and their desire to make the next Congress a productive one on the panel. “There’s every reason to believe that an energy bill can move forward,” at least in the Senate, he said. “It strikes me that a package that included increased access to domestic oil and gas reserves in tandem with more robust energy efficiency standards could strike the right balance to gain broad bipartisan support in both chambers because both of those measures are good for the economy. A Wyden aide said the incoming energy chairman hopes for some successes in the new Congress.
“Senator Wyden isn’t going to give up trying to advance better policies, including overhauling energy incentives,” Wyden spokesman Keith Chu said in an email. “Given that those incentives were once again extended in piecemeal, short-term fashion, it’s even more important that Congress work on a permanent solution, to replace the boom-and-bust cycles and uncertainty that have plagued the energy sector.”
Vestas Wind Systems A/S (VWS), the biggest wind-turbine maker, led gains among European peers as the U.S. Congress approved a law extending a tax credit for the industry. Shares in Aarhus, Denmark-based Vestas surged as much as 13 percent, the most in five weeks, and were up 7.8 percent at 34.35 kroner as of 10:52 a.m. in Copenhagen. Nordex SE (NDX1) rose 3.3 percent and Gamesa Corp. Tecnologica SA (GAM) jumped 7.2 percent. The U.S. House late yesterday passed a bill averting spending cuts and tax gains that had threatened an economic recovery. The law, already approved by the Senate, includes an extension of the Production Tax Credit, which pays wind-farm owners 2.2 cents for every kilowatt-hour of power they produce.
“Overall, this is very, very good news for the wind industry and I think it will help us out,” said Harold Prior of Milford, executive director of the Iowa Wind Energy Association. Because projects begun this year will be eligible for the tax credit, the Senate’s provisions are basically a two-year extension because the work can be completed in 2014, he added. “But the industry needs more certainty than a one- or two-year extension,” Prior said. “Pretty much 2013’s developments are lost right now because of the lead time needed to manufacture the major components. Also, the manufacturers of major components need a better surety of what the government subsidies are going to be before they invest millions in manufacturing these large components.