It begins to look like Congress will let the $0.022 per
kilowatt hour Production Tax Credit for wind generated electrical power expire
when the current legislation runs out December 31, 2012, and that is already
putting a damper on wind farm expansion plans, dampening the economic impacts
of wind farm construction work and wind generation equipment manufacturing, as
big players in that sector of the construction economy contemplate major
layoffs. John Graham, CEO of BP Wind Energy, which owns the 100 megawatt Flat
Ridge wind farm north of Medicine Lodge, Kansas, says the tax credit is still
needed to make wind energy generation price competitive with coal and natural
gas fueled power.
According to Graham, the Production Tax Credit costs the
government $3.5 billion annually in lost tax revenue, but produces $15 to $20
billion in investment in wind power manufacturing and construction. Matt Kaplan
of Cambridge, Massachusetts based IHS Emerging Energy Research estimates the
Production Tax Credit has so far produced an addidional 12 gigawatts of wind
power generating capacity, or 20% more additional generating capacity than any
earlier year of wind power construction. Kaplan predicts the rate of growth
will fall by 85% if the Production Tax Credit is permitted by Congress to
expire at the end of this year.
Kaplan’s prediction has a strong historical basis: in the
years 1999, 2001 and 2003, previous times Congress has allowed the Production
Tax Credit to expire, new wind power generator construction plummeted between
73% and 93% upon expiration of the tax incentive. Once the Production Tax
Credit expires, the only remaining incentive for continued wind power
construction is the state by state legislative mandate for utilities to buy a
certain percentage of their electricity from renewable sources – a mandate that
only exists in twenty nine states.
Wind power equipment maker Vestas has already threatened
layoffs of 1,600 plant workers in Colorado if the tax credit is permitted to
expire, and Mitsubishi Heavy Industries already scrapped plans for a $100
million manufacturing facility in Arkansas. The American Wind Energy
Association predicts loss of a total of 37,000 jobs if the credit is not
renewed.
