Wind power advocates are pushing for billions in tax incentives and grants in the $819 billion recovery package moving through Congress, hoping to offset an economic slowdown affecting the industry.
Expansion of wind energy, a key part of rural development throughout the Midwest and Great Plains, could depend on how the stimulus plan is overhauled by the Senate next week and eventually resolved by congressional negotiators.
Wind power posted gains last year, with electricity generated by wind turbines increasing by 50 percent and 13,000 additional jobs in wind turbine and component manufacturing, the American Wind Energy Association reported this past week. President Barack Obama has called for a doubling of renewable energy production in three years, a potential boon for wind power.
But the financial meltdown has slowed demand for wind turbines, siphoned off available financing and put many projects on hold.
“With the banks and insurance companies backing away from or out of this investment in wind market, that really has put a damper on wind,” said Bob Gates, an executive with Clipper Windpower Inc., a Carpinteria, Calif.-based turbine maker. “It’s gone flip-flop in four months.”
The House-passed bill and the Senate plan would offer $13 billion over 10 years to extend a production tax credit through 2012 – the credits currently expire each year – and provide tax breaks for investments in renewable energy. The House version also includes a grant program that covers 30 percent of the upfront costs of wind energy investments.
The Senate version includes the tax breaks but does not offer the grant program, which would allow wind and solar industries to convert tax credits into grants from the Energy Department.
Wind power advocates say the grant program is needed because tax credits have been hampered by the recession. The projects require large upfront financing and have traditionally attracted investors who use the credits to offset tax liabilities. But few of these investors are profitable now.
Clipper Windpower announced about 90 layoffs earlier this month, mainly at a manufacturing plant in Cedar Rapids, Iowa, and several wind-related manufacturers have announced similar cuts.
“Without this grant program or something very much like it, we’re looking at a very difficult year in 2009 and maybe 2010 as well,” said Greg Wetstone, senior director for government and public affairs at the American Wind Energy Association.
Several Midwest states are hoping to increase their stake in wind energy, pointing to the potential for rural development. Wetstone’s organization estimates that North Dakota has nation’s largest wind energy potential, followed by Texas, Kansas and South Dakota.
“We’re just scratching the surface with the potential we have with wind energy,” said Rep. Earl Pomeroy, D-N.D.
Proponents in Congress said the extension of the production tax credit would help. Wind farm developers would see a tax credit for every kilowatt-hour of electricity they produce extended through the end of 2012.
“We’ve got to get some certainty in these tax incentives and that means extending the production tax credit,” said Sen. John Thune, R-S.D.