Looming tax-credit expiration puts wind industry "under a dark cloud"

Posted: 12/01/2011 01:00:00 AM MST
By Mark Jaffe
The Denver Post

After two strong sales years,Vestas Wind Systems, which has four factories in Colorado, is bracing for

 the market to "fall off a cliff" if Congress fails to renew a wind-energy tax credit.

The wind-production tax credit, or PTC, is set to expire at the end of 2012, and that could lead to as much as an 85-percent drop in wind installations, according to consulting group IHS Emerging Energy.

"The industry is under a dark cloud," said Matthew Kaplan, associate director of IHS Emerging Energy.

Aarhus, Denmark-based Vestas, the world's largest wind-turbine maker, has invested $1 billion in four plants in Windsor, Brighton and Pueblo and created 1,700 jobs, including suppliers, according to the company.

"The looming expiration of the PTC has essentially stalled wind energy investment beyond 2012," Andrew Longeteig, a Vestas spokesman, said in an e-mail.

"We would anticipate the impact on jobs — especially manufacturing jobs — would be severe," Longeteig said.

There is a lobbying effort to extend the credit, with Democratic and Republican lawmakers supporting the effort.

"There is support, but it is hard to run an industry with this much uncertainty," said Peter Kelley, a spokesman for the American Wind Energy Association, a trade group.

The tax credit is equal to 2.2 cents for each kilowatt-hour generated and is the element that helps the industry with financing and competition with other types of power plants.

The average Colorado home uses about 632 kilowatt-hours a month, according to Xcel Energy. A gigawatt is 1 million kilowatts. The IHS forecast for 2012 is for a record 10.7 gigawatts of wind installations in 2012, and without the tax credit, that is projected to drop to 1.5 gigawatts in 2013.

In 2011, Vestas booked 14 new proj ects that will generate up to 1.6 gigawatts of power. That came after a record-setting 17 projects with 1.9 gigawatts in 2010.

Vestas does not release the dollar values of the projects.

In 2010, 23 percent of Vestas' revenue, or about $2.2 billion, came from its American operations, according to the company's annual report.

The bulk of the 2010 projects were in California and British Columbia, and this year more of the sales were in the Midwest.

One reason for the spreading market is technological improvements in wind turbines, said Paul Veers, chief engineer at the National Wind Technology Center, near Boulder.

"There are machines that can work in a good but not great wind area, like Indiana, and still be cost-effective," Veers said.

There are also more turbines being manufactured in the U.S. — with European turbine makers such as German Siemens AG and French Alstom SA — building plants here.

While Vestas is the single largest wind-energy employer in the U.S., there are 400 wind manufacturing facilities in 43 states, according to the wind-energy association.

"That makes renewing the credit a jobs issue," Veers said. "If there is no PTC, turbine manufacturers are going to have to close plants or dial back."

Mark Jaffe: 303-954-1912 or mjaffe@denverpost.com


Vestas North American wind-farm orders for 2011

•Harvest II Wind Project, Michigan (59 megawatts)

•Palouse, Washington state (104 megawatts)

Bull Hill, Maine (34 megawatts)

•Lake Winds, Michigan (101 megawatts)

•Anacacho, Texas (99 megawatts)

•Kingdom Community Wind, Vermont (65 megawatts)

•Halkirk, Alberta (149 megawatts)

•Alta WEC expansion, California (219 megawatts)

•Caney River, Kansas (200 megawatts)

•Coram Cal. Development, California (102 megawatts)

•Port Dover Nanticoke, Ontario (104 megawatts)

•Three undisclosed projects, two in Ontario and the other in an unnamed site


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