Renewables, Wind

The Wind PTC: A Victim of Politics

Jobs and the economy – these are the messages being heralded of utmost importance during the presidential campaigns. Meanwhile, with the wind energy industry still on pins and needles regarding an extension to the Production Tax Credit (PTC), no orders for wind projects in the U.S. have been placed for 2013. Manufacturers are left with no other choice but to begin dismissing employees.

Just this week, two sets of wind manufacturing layoffs have been announced. First, blade manufacturer LM Wind Power said it will be forced to lay off 230 people at its facility in Little Rock, Ark.  Then wind tower manufacturer DMI Industries said it will close its plants in Tulsa, Okla. and West Fargo, N.D. The plant in West Fargo will close in October and terminate 217 employees. The Tulsa plant will close in November and 167 people will be laid off.

President Barack Obama is actually using a campaign stop in Pueblo, Colo. today to push for the PTC extension. He is visiting Vestas’ wind tower manufacturing plant, which in July celebrated the production of its 1,000 wind tower. However, Vestas CEO Ditlev Engel told The Denver Post earlier this year that the company may be forced to lay off 1,600 employees in Colorado if the PTC isn’t extended.

It’s true that the PTC has bi-partisan support in Senate and Congress. And just last week, a Senate committee passed an extension to the wind tax credit. Yet ironically, in preparation for a presidential race where jobs will likely prove to be of utmost importance, wind industry jobs are falling by the wayside.

Many in the wind energy industry, and even Karl Rove, senior advisor and deputy chief of staff to former President George W. Bush, think the PTC will not see an extension until the lame duck session. This kind of last-minute extension will of course lead to an increasing number of layoffs and the jolting stop-and-start momentum that this industry has experienced in the past. And while a one-year extension may be helpful in saving or regaining some jobs, it will do little to build the long-term health of the wind industry.

Harm Toren, vice president and chief service officer of Mitsubishi Power Systems, expressed concern regarding the unpredictable nature of the market due to policy uncertainty during AWEA’s WindPower event in June. “The stop-start nature of the U.S. regulations really prohibits the long-term nature of R&D and planning for sales. If we have a repeat of 2004, it will be difficult for us to deliver due to the suppliers and supply chain not being able to catch up.”

A one-year extension would also do little to ensure that projects are actually built,  since most wind projects take 18 to 24 months to complete from start to finish.

“This every 12-month hopscotch doesn’t do anything for long-term strategy. We’ve got to have a playing field that brings some stability,” said Duncan Koerbel, interim CEO of Suzlon during WindPower.

For now, though, it seems the wind industry will likely remain a victim of politics – at least until after the elections.