Last year’s lengthy debate over federal wind energy incentives likely will repeat itself this year.
On Tuesday, Congress extended the wind energy production tax credit for another year as part of the last-minute deal to avoid the so-called “fiscal cliff.” That came after Iowa leaders spent months calling on Congress to pass the tax break, which industry advocates say is crucial to supporting the state’s 6,000 wind energy jobs.
“Given the alternative, we’re really thrilled with this passing,” said Harold Prior, executive director of the Iowa Wind Energy Association. “This is going to spur another short-term boom in wind farms.”
Iowa is the country’s second-leading producer of wind energy, trailing only Texas. About 20 percent of Iowans’ electricity comes from wind.
Some developers last year delayed wind energy projects because it was unclear whether Congress would renew the tax credit. That was bad news for Iowa companies that manufacture wind energy equipment and turbine components, leading to layoffs at Clipper in Cedar Rapids and Siemens in Fort Madison. Acciona, which manufactuers wind turbines in West Branch, avoided layoffs in 2012 by shifting its focus to international buyers, who aren’t affected by U.S. tax policy.
Now that the tax credit is secure for another year, Prior said that backlog of projects will move forward, increasing demand for Iowa-made wind products.
That, paired with a new provision allowing wind farms to earn the tax credit as long as construction starts in 2013, gives Prior hope there will be an increase in the number of wind energy jobs in Iowa this year.
“Many of these projects were very well developed and may have been ready to kick off,” Prior said. “A number of projects that have been put on hold will be reactivated pretty quickly.”
But certainty over the wind energy production tax credit is fleeting. The incentive is again set to expire at the end of the year.
“Washington should have never allowed this brinksmanship to occur and we cannot let it repeat itself in a year,” U.S. Rep. Dave Loebsack said in a statement to the Press-Citizen this week. “Congress must begin work immediately to ensure Iowans’ jobs are not put on the line once again.”
The uncertainty over the tax credit’s long-term future already has had an impact on wind development in Johnson County.
More than a year ago, for instance, Maryland-based Nadicon announced plans to build a foundry focused on casting turbine components. However, that project has stalled amid questions over the tax credit.
Another company, Illinois-based PNE Wind, had been planning a wind farm in Solon, but that project fizzled because of concerns over state regulations.
Mark Nolte, president of the Iowa City Area Development Group, said wind energy suppliers will be reluctant to expand until they have a more clear view of the tax environment.
“Ultimately Congress needs to set a multi-year strategy, even if that is a plan to permanently phase out the tax credits so that the market can plan accordingly,” Nolte wrote in an email to the Press-Citizen. “The constant uncertainty is the largest barrier to the growth of this industry on the manufacturing side.”
|Wind Watch relies entirely
on User Funding