Wind Energy

Forecast for wind energy: Storm clouds ahead without stable tax policy

The U.S. wind power industry stands on the verge of what could be a record year in 2012, but may come to earth if Congress fails to extend its federal tax incentive, in effect sharply and suddenly increasing the industry’s tax burden. That’s the message that emerges from a recent overview of the wind industry’s outlook by Kate Galbraith in The New York Times.

Galbraith quotes Michael O’Sullivan, senior vice president for development at renewable energy giant NextEra Energy Resources, as saying that if the credit is not extended, “I believe 2013 would have minimal if not close to zero wind built in the United States."

The problem is compounded in some respects by what O’Sullivan termed "the PTC [Production Tax Credit] cliff"–if the credit does expire, companies in the industry have a strong incentive to let operations grind to a halt until they know whether it will be reinstated. That has happened three times in the past 12 years, and although Congress has renewed the incentive and made the renewal retroactive to the date of expiration, the impact has been severe each time. With today’s wind industry several times the size and far more of a manufacturing powerhouse than it was the last time the incentive was allowed to lapse, many more workers will find themselves looking for work in what is already a sluggish economy.

As we have argued here on several occasions, now is not the time to increase taxes on this emerging industry. Extending the PTC will help wind power become increasingly cost-competitive and keep generating badly needed manufacturing jobs as well as income for farmers and for rural communities. Failure to extend it will roll back the progress America has made in diversifying our electricity generation portfolio with this clean, affordable, homegrown energy source.

Tom Gray, www.awea.org/blog/