Wind energy faces the end of a $1 billion tax break. Obama wants to extend it, Romney does not. @dianeNYT: http://nyti.ms/P2OfCc
12:38 PM - 20 Sep 12 · Details
Tax Credit in Doubt, Wind Power Industry Is Withering
Jessica Kourkounis for The New York Times
Gamesa, a major maker of components for wind turbines, has all but shut down its factory in Fairless Hills, Pa., and furloughed 92 workers.
By DIANE CARDWELL
Published: September 20, 2012 77 Comments
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FAIRLESS HILLS, Pa. — Last month, Gamesa, a major maker of components for wind turbines, completed the first significant order of its latest invention: a camper-size box that can capture the energy of slow winds, potentially opening up new parts of the country to wind power.
rail car, Gamesa had all but shut down its factory here and furloughed 92 of the workers who made them.
“We are all really sad,” said Miguel Orobiyi, 34, who worked as a mechanical assembler at the Gamesa plant for nearly five years. “I hope they call us back because they are really, really good jobs.”
Similar cutbacks are happening throughout the American wind sector, which includes hundreds of manufacturers, from multinationals that make giant windmills to smaller local manufacturers that supply specialty steel or bolts. In recent months, companies have announced almost 1,700 layoffs.
At its peak in 2008 and 2009, the industry employed about 85,000 people, according to the American Wind Energy Association, the industry’s principal trade group.
Many of those jobs have disappeared since, as wind companies have been buffeted by weak demand for electricity, stiff competition from cheap natural gas and cheaper options from Asian competitors. Chinese manufacturers, who can often underprice goods because of generous state subsidies, have moved into the American market and have become an issue in the larger trade tensions between the two countries. In July, the United States Commerce Department imposed tariffs on steel turbine towers from China after finding that manufacturers had been selling them for less than the cost of production.
And now, on top of the business challenges, the industry is facing a big political problem in Washington: the Dec. 31 expiration of a federal tax credit that makes wind power more competitive with other sources of electricity.
The tax break, which costs about $1 billion a year, has been periodically renewed by Congress with support from both parties. This year, however, it has become a wedge issue in the presidential contest. President Obama has traveled to wind-heavy swing states like Iowa to tout his support for the subsidy. Mitt Romney, the Republican nominee, has said he opposes the wind credit, and that has galvanized Republicans in Congress against it, perhaps dooming any extension or at least delaying it until after the election despite a last-ditch lobbying effort from proponents this week.
Opponents argue that the industry has had long enough to wean itself from the subsidy and, with wind representing a small percentage of total electricity generation, the taxpayers’ investment has yielded an insufficient return.
“Big Wind has had extension after extension after extension,” said Benjamin Cole, a spokesman for the American Energy Alliance, a group partly financed by oil interests that has been lobbying against the credit in Washington. “The government shouldn’t be continuing to prop up industries that never seem to be able to get off their training wheels.”
But without the tax credit in place, the wind business “falls off a cliff,” said Ryan Wiser, a staff scientist at Lawrence Berkeley National Laboratory who studies the market potential of renewable electricity sources.
The industry’s precariousness was apparent a few weeks ago at the Gamesa factory, as a crew loaded the guts of the company’s new component, a device known as a nacelle, into its fiberglass shell. Only 50 completed nacelles awaited pickup in a yard once filled with three times as many, most of the production line stood idle, and shelves rated to hold 7,270 pounds of parts and equipment lay bare.
“We’ve done a lot to get really efficient here,” said Tom Bell, the manager of the plant, which was built on the grounds of a shuttered U.S. Steel factory that was once a bedrock of the local economy. “Now we just need a few more orders.”
Industry executives and analysts say that the looming end of the production tax credit, which subsidizes wind power by 2.2 cents a kilowatt-hour, has made project developers skittish about investing or going forward. That reluctance has rippled through the supply chain.
