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Wind Energy Granted Reprieve with Fiscal Cliff Agreement

wind-energyIf you listened really closely this morning, I swear you could hear the collective sigh of relief from over 37,000 homes throughout the country when the new fiscal cliff extensions were announced.  That number directly represents manufacturing jobs across 500 factories that the American Wind Energy Association (AWEA) predicts will be saved by extending the Production Tax Credit (PTC) and Investment Tax Credit (ITC) for wind energy projects started in 2013.  Many projects take 18-24 months to complete; therefore they only need to be started in 2013 to qualify.

Politicians like Sen. Lamar Alexander (R-Tenn) scoffed at the 2.2¢ per kilowatt hour wind energy tax cut, citing how “a government that borrows 42 cents of every dollar it spends can’t afford it.”  Such concerns forced the hand of AWEA former CEO Denise Bode (she was the acting CEO at the time) to offer a reduction of financial backing for her own industry. On behalf of AWEA, the industry’s lobbying group, she offered to cut wind energy funding by 10% in 2014, 20% in 2015, 30% in 2016, and 40% in 2017 and 2018 if the wind industry could be ensured immediate funding by the government.  The bold move fell on deaf ears in Congress as no action was made, but it did cast a dark cloud over the possibility of the PTC and ITC being a part of fiscal cliff extensions until this week’s developments.

Meanwhile, interim AWEA CEO Rob Gramlich had a much brighter disposition on Wednesday, “[n]ow we can continue to provide America with more clean, affordable, homegrown energy, and keep growing a new manufacturing sector that’s now making nearly 70 percent of our wind turbines in the USA.”

But did relief come too late for the wind energy industry?  Wind energy generation capacity grew 44% in 2012, which is a higher percentage than even natural gas for the year.  Can we expect the same this year?  Many are pessimistic based on how turbine manufacturers like Siemens and Vestas began scaling back manufacturing in the middle of 2012.  In addition, developers were scrambling frantically to complete projects at the end of 2012, as the NY Times pointed out last week.

However, suppliers and manufacturers alike proved that the industry is capable of consistently producing and distributing the country’s fastest growing renewable energy resource very quickly – citing the 44% growth in 2012.  There is no doubt that the combination of lower supply and the hurried completion of projects before the end of the 2012 calendar year might result in a generation percentage drop in 2013, but one thing’s for certain – installations for the 2013 wind energy sector will be notably higher than the projected 70-90% sector freefall that could have occurred if tax exemptions were completely eliminated.

Kristopher Settle
Energy Curtailment Specialists, Inc.

Kris can be found on Twitter and Google+.

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