Officials pleased by wind energy tax credit extension

1/4/2013

By JOHN GREEN

By JOHN GREEN

Special to The Telegram

Officials in the wind energy sector expressed gratitude that Congress included a one-year extension of the wind energy tax credit in the "fiscal cliff" tax bill approved Tuesday, but declined to project what it might mean for an industry that's experienced substantial layoffs over the past several months and had warned of more.

Language in the tax bill extends a 2.2 cents-per-kilowatt tax credit that expired Dec. 31 for one more year. Projects on which construction starts in 2013 will be eligible for the credit, according to a release from the American Wind Energy Association.

"It takes 18 to 24 months from start to build and bring a project online," said Ellen Carey, media relations manager with AWEA. "So it is a one-year extension for start of construction in 2013. They have to start putting turbines up this year."

The Production Tax Credit, or PTC, is actually a discount applied to the cost of energy purchased by utilities under long-term contracts, making wind projects more economically competitive with other forms of energy production.

With a delay in extension of the credit, wind energy equipment suppliers had experienced significant layoffs over the past four months and were projecting even more.

The Siemens Wind Energy plant in Hutchinson, for example, cut its workforce by more than half with two rounds of layoffs in October and November.

Company officials noted, however, that wind turbine buyers, in order to beat the previous PTC expiration deadline, had "front-loaded" orders, so employment at the Hutchinson nacelle manufacturing plant was at a peak when the layoffs occurred.

Wind farms had to be completed before the end of 2012 to qualify for the earlier tax credit.

It was unclear at this point, industry officials said, whether a similar spike in orders would likely occur.

A study by Navigant Consulting, on behalf of AWEA, projected losing the credit would result in the loss of nearly half the 75,000 jobs in the sector in the nation, but that a four-year extension of the credit would grow the industry by at least a third.

The study did not address just a one-year extension.

"Since the bill has just been passed and is awaiting signature by President Obama, we are still evaluating the exact impact of this extension on the wind industry," AWEA's Carey said in an email.

At Siemens' corporate headquarters for its wind power operations in North America, officials called "the long-sought extension" of the tax credit "a positive step in the right direction."

"We look forward to working with our customers and suppliers on wind power projects that will start construction in 2013," stated Monika Wood, corporate communications director for Siemens' Wind Power Americas.

"However, many wind project developers had already advanced their orders due to the pending expiration, making 2012 a record year in terms of installations. Therefore, we are currently evaluating the potential impact the extension of the PTC will have in the short term," Wood stated.

The industry is expected to continue pushing for a longer term credit beyond this year, potentially with a graduated four- or six-year phase out, after a separate study showed it needs assistance for that long to be able to compete with other energy sectors.

Siemens supports those continued efforts and the phase-out approach, Wood said.

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