And so it begins. In January, wind turbine manufacturer Vestas announced that it would lay off up to 1,600 American workers if Congress cannot extend a key tax credit for the wind industry. And now, Mitsubishi Heavy Industries, a large emerging player in manufacturing and project development, says it will scrap plans to build a new $100 million plant in Arkansas without the tax credit in place.
Even with strong bipartisan support among governors, the business community, and many members of Congress, a small group of clean energy opponents have held up passage of the production tax credit.
Recharge News has reported on the latest comments from Mitsubishi on the lack of action in Washington:
In 2009, the Japanese company revealed plans for a $100m nacelle manufacturing plant in Arkansas to support demand in its main market. It was scheduled to have opened earlier this year.
However, turbine sales are certain to plummet if Washington does not renew the production tax credit (PTC), which is due to expire at the end of the year.
“We need a market to operate our factory. Right now, the market is not so good. We have a site but cannot operate it,” says Yoshinori Ueda, assistant general manager of MHI’s wind turbine business. “If we have the PTC, we will go ahead.”
Without a firm outlook for more equipment orders, it doesn’t make sense for Mitsubishi to operate the U.S. plant. That would mean the end of 330 long-term manufacturing and operations jobs in Arkansas before they had a chance to start. What a great sign that sends to global investors.
Meanwhile, the oil and gas industries enjoy permanent tax benefits for manufacturing and drilling operations. (The top five oil companies brought in $137 billion in profits last year alone.)
The production tax credit provides wind developers with 2.2 cents in tax benefits for every kilowatt-hour of electricity produced. It has been a central driver for wind deployment in the U.S., helping drive down the cost of wind electricity by 90% since it was introduced.
Because of that support mechanism wind is more competitive than ever. However, extremely (and unsustainably) low natural gas prices are making it difficult for developers to compete. Without an extension of the tax credit, the short-term market for wind could be completely squashed — taking investments in manufacturing, R&D and installation with it.
Without an extension of the production tax credit, the wind industry predicts it will lose up to 37,000 jobs across the U.S.
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