Iowa’s wind energy industry praises inclusion of tax credit in fiscal cliff budget deal

Source: by William Petrosk, Des Moines Register • Posted: Wednesday, January 2, 2013

Mechanical support engineer Brian Lapcewich of West Des Moines stands atop a General Electric wind turbine near Blairsburg in May 2011.

The fiscal cliff budget package approved by the U.S. Senate early today would provide a one-year extension of the wind production tax credit, which an industry official describes as good news for Iowa, a national leader in wind energy.

The deal, which must still be considered by the U.S. House, would extend the wind energy tax credit until the end of 2013, allowing projects that begin construction this year to be eligible. The tax credit was scheduled to expire Monday, and uncertainty about the expiration of the 2.2 cents per kilowatt production incentive had hurt Iowa’s wind industry, which employs about 7,000 people.

About 20 percent of the electricity in Iowa is generated by wind turbines, representing about 5,100 megawatts of electricity. Iowa ranks third, behind Texas and California, in installed capacity for wind-generated electricity.

“Overall, this is very, very good news for the wind industry and I think it will help us out,” said Harold Prior of Milford, executive director of the Iowa Wind Energy Association. Because projects begun this year will be eligible for the tax credit, the Senate’s provisions are basically a two-year extension because the work can be completed in 2014, he added.

“But the industry needs more certainty than a one- or two-year extension,” Prior said. “Pretty much 2013’s developments are lost right now because of the lead time needed to manufacture the major components. Also, the manufacturers of major components need a better surety of what the government subsidies are going to be before they invest millions in manufacturing these large components.

“So while it is good news on one side, it is almost too short to do a really long-term good,” Prior continued. “So we need to take this as a really positive step and thank the Senate for doing t his, and hope the House approves t his, then move forward to try to get a long-term extension.”

One of the Iowa businesses particularly hurt by the uncertainty over the future of the wind production tax credit has been Siemens Energy Inc. of Fort Madison, which in September said it would lay off 407 employees at its wind blade manufacturing plant.

Prior said if the House goes along with the Senate’s action it may help restore some jobs at Siemens in Fort Madison. “Absolutely, assuming the developers move forward with projects that have been on hold, and have been shelved because of uncertainty over the extension.”

Critics of the wind energy tax credit had contended that extending the tax incentive was too expensive and they noted that wind farms require other sources of energy, such as coal-fired power plants, as a back up.

Some electrical companies, such as Exelon Corp., said the wind energy industry has matured and is thriving, and that tax credits are no longer needed. Because of the pricing advantage that the wind production tax credit provides to wind energy projects in today’s competitive markets, the credit actually puts at risk the operation of other, more reliable clean energy sources, said Joseph Dominguez, Exelon’s senior vice president for government and regulatory affairs and public policy.

The Washington, D.C.-based American Wind Energy Association has warned that without an extension of tax credits, 37,000 wind industry jobs could be lost nationally in the first quarter of 2013.