January 3, 2013
Pennsylvania

Wind-power tax credit’s extension may not revive plants

Andrew Maykuth, Inquirer Staff Writer | Posted: Thursday, January 3, 2013, 3:01 AM | www.philly.com

The extension of the federal wind-power tax credit as part of the fiscal cliff package was hailed as a victory Wednesday by renewable power advocates.

But a Bucks County wind-turbine manufacturer, where much of the workforce was furloughed in September because of a slowdown in orders, is unlikely to ramp up production any time soon because of the last-minute congressional rescue of the tax credit.

“I think it will take a little while for this to work its way to the manufacturing sector, but it will be a stimulus,” said David J. Rosenberg, the vice president of marketing for Gamesa USA, the Spanish wind-turbine manufacturer with U.S. headquarters in Langhorne.

The production tax credit was due to expire at the end of 2012, which sparked a frenzy of construction to bring a record amount of wind turbines into operation by Dec. 31. But uncertainty over the continuation of the credit meant that few new orders are in the works, and wind developers and manufacturers have laid off their staffs.

Gamesa’s plant in Fairless Hills is scheduled to complete its last order in a few weeks for turbines that will be exported to Uruguay. It may take many months for domestic wind-turbine developers to restart projects and to place new orders, Rosenberg said.

The industry “has really throttled back,” Rosenberg said, and Gamesa is concerned that many members of its trained workforce may not be available later this year when new orders are expected to pick up.

“Hopefully, with this extension, the orders will come back,” said Jerry Holt, a Gamesa employee and an officer in the Steelworkers union. More than half of Gamesa’s 130 unionized workers in Fairless Hills are currently laid off.

In the last decade, the wind industry has experienced repeated feast-or-famine cycles tied to the tax benefit, which provides wind-power producers with a 2.2-cent tax credit for each kilowatt hour of electricity they produce.

The American Wind Energy Association has called on Congress to approve a longer-term tax credit that phases out by 2018 so that the industry can more effectively plan its investments.

“It’s really tough if you’re a manufacturer and want to make a 30-year investment in a plant to do that on the basis of federal policy that changes every few years,” said David Foster, executive director of the BlueGreen Alliance, a green-energy advocacy coalition of environmental and labor interests.

The extension will cover all wind projects that start construction in 2013, so the industry expects that it will stimulate manufacturing through 2014.

The wind tax credit is expected to cost the federal government $12 billion over 10 years, and its extension was intensely debated in recent weeks.

Exelon Corp., the Chicago parent company of Peco Energy Co. and one of the nation’s largest power generators, led opposition to the production tax credit. Though Exelon is also a major wind-farm operator, it opposed the tax credit for distorting energy markets and driving down margins at competitive power producers.

Exelon said it was disappointed in the extension. “At this juncture, wind power can and should stand on its own in competing with other clean energy alternatives,” the company said in a statement.