A U.S. boom in wind farm projects is poised to bust in 2013 as tax breaks by President Barack Obama’s administration prompt developers to rush through construction of new sites this year, according to Bloomberg New Energy Finance.
More than 9 gigawatts of turbines may be constructed by the close of 2012 when the Production Tax Credit ends, said Justin Wu, head of wind analysis at Bloomberg New Energy Finance. The U.S. Treasury Department’s cash grant, which expired on Dec. 31, also spurred financing for projects to be built this year.
While 2012 will be a “bumper” year, Hong Kong-based Wu said, “the U.S. wind market will likely crash in 2013 as uncertainty over the Production Tax Credit extension this year means that little development activity will take place.”
Congress faces pressure to extend the credit after Vestas Wind Systems A/S (VWS), the biggest turbine maker, said it would cut 1,600 U.S. jobs without the incentive. Companies such as Aarhus, Denmark-based Vestas and General Electric Co. (GE) rely on the credit to provide a buffer against narrowing margins from subsidy cuts in Europe, and Chinese rivals such as Sinovel Wind Group Co.
Worldwide, about 40 to 43 gigawatts may have been installed last year including offshore projects, a recovery from 2010, Wu said. The Chinese market will slow after this year, following expected 2011 installs of 20.66 gigawatts, he said.
The U.S. Production Tax Credit grants an incentive worth 2.2 cents a kilowatt-hour of wind power generated by projects.