Wind turbine manufacturer Gamesa is halting the installation of a test turbine off the coast of Virginia because of uncertainty over regulation and demand in the U.S.
Without a mature offshore wind-energy market in the U.S., the company said Monday, it is “extremely difficult” to justify the cost of completing the project, under way since September 2010.
The announcement comes as Congress debates whether to extend federal tax credits for wind-energy producers to help offset costs. The Production Tax Credit, first introduced in 1992, expires this year.
Bills have been introduced in the House and the Senate to extend the tax credits for between two and four years. But the price tag is steep: About $2 billion to $4 billion in lost tax revenue.
Bucks County Congressman Mike Fitzpatrick, R-8, said he would support a short-term extension of the tax credit, to “ensure a level playing field” for fledgling technologies. But the tax credits are not a long-term solution, he said.
“This is a bigger issue,” Fitzpatrick said. “Time and again, we have seen administrations from both parties fail to adopt a balanced energy policy, which recognizes proven energy technologies and supports new green technologies in a way where the federal government is not picking a winner or loser between them, but permits every energy sector to compete on a level playing field for their investment and for proper share of the market.”
The American Wind Energy Association, in industry trade group, said in a statement that not extending the tax credits could cost tens of thousands of jobs.
“Businesses need certainty to invest and this is another example of how policy uncertainty is affecting business decisions,” the statement said. “Wind power is an American success story, supporting nearly 500 manufacturing facilities in 43 states and employing 75,000 Americans. Urgent extensions of the production tax credit for land-based wind energy and the investment tax credit for offshore wind will allow the American wind-energy success story to continue.”
Gamesa, a Spanish wind company, employs hundreds in Pennsylvania, most at its North American headquarters in Middletown and at its turbine manufacturing facility in Falls.
It’s unclear what Gamesa’s decision could mean for local jobs. Efforts to reach a company representative for additional comment Monday were unsuccessful.
Gamesa had been working with Newport Shipbuilding, a division of Huntington Ingalls Industries, since September 2010, to design, build and install an offshore test turbine. It will halt that project once the critical design review phase is done.
“I want to commend Virginia Gov. Bob McDonnell and his administration, especially the VMRC (Virginia Marine Resources Commission) for the time and effort they put into approving the permit for this project,” Gamesa North American Chairman David Flitterman said in a statement. “The governor is a leader for his vision to utilize clean, renewable energy, and his team did everything in their power to fast-track this offshore wind development.
“Gov. McDonnell understands the value of offshore wind – a vast, untapped domestic energy resource that can power local economies and put people to work,” Flitterman’s statement continued. “I think we both share the same hope that the U.S. market can mature quickly so this project and others like it become a reality in the near future.”
Gamesa also said it has postponed plans for an offshore prototype near Cape Charles, Va., which the VMRC approved in March, and will wind down its work with the Offshore Wind Technology Center in Chesapeake, Va.
“The decision is disappointing,” Doug Stitzel, Newport News Shipbuilding vice president of energy programs, said in a statement. “However, our commitment to our country’s energy efforts continues.”
Gamesa said it continues to move forward on wind turbine projects for international customers, and plans to install a wind turbine off the coast of Spain.
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