Vestas CEO Predicts 80 Percent Drop In U.S. Wind Market If Tax Credit Is Not Extended

by Max Frankel

The U.S. wind market could fall by up to 80 percent in 2013 without an extension of a key tax credit, says the CEO of the world’s biggest wind turbine manufacturer.

According to Ditlev Engel, the CEO of Vestas, allowing the Production Tax Credit to lapse would be devastating for the U.S. market:

“In the United States, the market this year is very, very busy,” Vestas Chief Executive Ditlev Engel told a gathering of EU European affairs ministers and other senior officials at Vestas’ research and development centre.

“But because of the potential lapse of the regulatory framework in the U.S., this market will probably go down 80 percent next year,” he said.”

The Federal Production Tax Credit (PTC) is a 2.2 cent per kilowatt-hour tax credit for renewable electricity producers. It is set to expire at the end of 2012, like it does periodically. The credit was created to allow the wind industry to compete with the fossil fuel industry, which has been supported by numerous permanent tax credits.

Every time the PTC expires, wind development has fallen between 70 and 90 percent.

Engel’s announcement strongly reinforces the prevailing opinion within the industry that the failure of Congress to renew the PTC would decrease investments in wind energy for the coming year as much as 90-100%. In this election year, it seems increasingly unlikely that the PTC will be extended before the end of December.

The effects of the uncertainly around the PTC are already being felt. In April, Everpower Renewables in Ohio, home state of House Speaker John Boehner (R-OH), said that it would halt plans for a $20 million, 54-turbine wind project that would have created as many as 200 immediate jobs. Ohio is home to between 5,000 and 6,000 wind jobs that could be in jeopardy by Congress’ inaction.

Upwards of 75,000 Americans work in the wind industry. According to an estimation by the economic consulting firm Navigant, up to 37,000 jobs will be lost if the PTC is not renewed. In January, Vestas announced that it would lay off 1,600 American employees if the tax credit is not extended.

The wind industry has been plagued by PTC renewal questions for years: “The inconsistent nature of this tax credit has been a significant challenge for the wind industry, creating uncertainty for long term planning and preventing steady market development.”

Despite these continued difficulties, in the last 5 years, wind has brought the United States $20 million of private investment per year. The American company General Electric has attracted tens of billion of dollars in foreign investment and has been able to bring the cost of wind power below the cost of new coal resources.

Moreover, despite erroneous claims by some opponents of clean power, the Department of Energy has estimated that by 2030, wind could account for up to 20% of U.S. power generation. All of this is in jeopardy if Congress fails to renew the PTC.

Numerous coalitions, including a bipartisan group of Governors, have sent letters to Congress urging action on this issue:

Wind-related manufacturing is beginning to slow in our states because the credit has not yet been extended. If Congress pursues a last minute approach to the extension, the anticipated interruption of the credit’s benefits will result in a significant loss of high-paying jobs in a growing sector of the economy.

The leading wind project developers and manufacturers are slowing their plans for 2013 and beyond due to the current uncertainty. Some developers have no projects scheduled for 2013, and are beginning to lay off employees. The ripple effect of this slow down means reduced orders for turbines and decreased business for the hundreds of manufacturers who have entered the wind industry in our states. If the tax credit is allowed to expire at the end of 2012, there will be negative impacts on the high-tech manufacturing jobs that the industry has brought to or created in our states.

Their calls have been ignored.

Even as members of Congress delay action on the PTC, many continue to make false claims about “job killing” regulations. In fact, it is Congressional politicking and frustrating inaction that has put the wind industry — and its thousands of American employees — on the brink.

Max Frankel is an intern on the energy policy team at the Center for American Progress.

2 Responses to Vestas CEO Predicts 80 Percent Drop In U.S. Wind Market If Tax Credit Is Not Extended

  1. There is no logic that consider allowing these tax credits to expire while continuing subsidy of oil and gas. However, that is absolutely what is most likely to happen in Washington.

    Saw a poster yesterday that said something like “Change our politics, not our climate: Vote Green.” Seems to me that the current politics of Republican Brain vs. Democratic Fundraising just is not working. But, we will do the same thing again and expect different results. Crazy.

  2. colinc says:

    “Republican Brain”… ROTFLMFAO!

    Thanks, WR, that’s hilarious!