An arm of Spain’s Iberdrola SA (IBDRY, IBE.MC) has suspended planning for new wind farms in the U.S., an executive said Wednesday, anticipating that Congress may not extend a popular tax credit for the industry.
Rich Glick, vice president of government affairs for Iberdrola Renewables, also predicted Wednesday that there would be “close to zero” megawatts of wind power built in the U.S. in 2013 if the credit isn’t extended soon. “This is a really urgent situation,” he told congressional staffers at a briefing here.
The statement came as lawmakers consider whether to extend the credit in coming weeks as part of a broader legislative deal to give payroll tax breaks to U.S. workers. If the wind provision isn’t included in that bill, which is expected to be voted on next month, it might not be considered again until after the November elections, when Congress is next expected to take up tax issues.
Wind farms that are producing electricity by the end of this year can claim the credit, and industry observers say 2012 could be a record year for wind installations as developers race to complete projects before the deadline.
But the wind industry is scaling back future plans now because it takes years to plan a project and they can’t count on any future tax credits.
“Anything we can’t build in 2012, we’ve pretty much suspended operations on,” Iberdrola’s Glick said Wednesday. He also projected that wind manufacturers would start ramping down production during the third quarter of 2012 without extension tax credit.
“If we don’t get on that train at the end of February, it’s going to be a dry spell,” said Joe Baker, chief executive of Acciona Wind Power North America, referring to the tax bill that Congress could pass next month. Acciona Wind Power North America is part of Spain-based Acciona SA (ANA.MC).
Baker said the company’s turbine assembly facility in Iowa might be able to keep its workforce at about 125 without the credit by shipping the turbines to wind farms in Canada, Mexico, or elsewhere. But it could be ramping up production and hiring more people if the credit were still in place, he said.
The American Wind Energy Association and other trade groups support a bill that would extend the credit by four years. Senate Majority Leader Harry Reid (D., Nev.) said Tuesday the tax credit is “extremely important” and “job-creating” and suggested it should be part of ongoing negotiations on the payroll tax.
But there are competing energy policy priorities in those talks. On Tuesday one negotiator for House Republicans, Rep. Fred Upton (R., Mich.), said provisions to delay enforcement of Environmental Protection Agency rule on industrial boiler emissions and to expedite the approval of the cross-border Keystone XL oil pipeline from Canada should also be part of the deal. Many Senate Democrats oppose both of those provisions.
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