Pennsylvania’s wind energy industry grows

Pennsylvania’s chances to create thousands of jobs in the wind energy industry and get an economic boost from $1.5 billion in investments over the next four years could be reduced if Congress does not extend a tax credit that will expire at the end of 2012, according to wind power advocates.

If Congress fails to pass a four-year extension of a production tax credit, between 5,000 and 7,000 jobs that might be created during that period in Pennsylvania would be at risk, and wind-power investments worth between $1.25 billion to $1.5 billion in the state might not be made, according to a study released last week by the American Wind Energy Association, a Washington, D.C.-based trade group.

The study prepared by Navigant Consulting Inc. of Chicago, did not predict how many of those Pennsylvania jobs would be lost if the tax credit extension were not passed, said Elizabeth Salerno, spokeswoman for the association.

The production tax credit gives companies that generate power from wind a 2.2-cent per kilowatt hour tax credit for the first 10 years of a wind farm’s operation. The tax credit gives companies an incentive to own windmill farms and sell the power to utilities. In addition to the tax credit, a Treasury Department grant program for the wind energy industry expires at the end of this year.

On a national scale, the study found that with the tax credit, the wind industry can create and save 54,000 American jobs in the next four years. That includes expanding the wind manufacturing sector by one third to 46,000 manufacturing jobs. Without the tax credit, jobs in the wind industry will be cut in half and there will be a one-third cut in American wind-manufacturing jobs, while private investment in the industry would drop by nearly two-thirds.

Pennsylvania’s windmill farms support 5,000 jobs, according to Citizens for Pennsylvania’s Future. The state is home to 15 plants that manufacture components for the wind industry.

Duquesne University professor Kent Moors, an energy expert, said three or four years of continued subsidies for the wind energy industry will not be sufficient to put it on par with other energy sources.

"If people are looking for a ‘silver bullet’ in all of this, it doesn’t seem to be there. Wind’s ability to do it without government subsidies is extremely doubtful," Moors said.

Industry analysts and observers say that growth — seven wind farm projects in three years and five under construction — stems from the state’s requirement that utilities buy renewable energy, a production tax credit, and improved technology that makes wind turbines more efficient.

"There’s been a flurry of activity recently," said Thurman Brendlinger, program director for wind energy at the Clean Air Council, a Philadelphia-based environmental organization.

Since Pennsylvania’s first utility-scale wind farm became operational in May 2000, when eight turbines started generating 10.4 megawatts of electricity in Garrett, Somerset County, the industry has burgeoned. The state has 16 utility-scale wind farms, with 433 tall turbines creating 735 megawatts of electricity that go into the electric utility grid.

That’s enough electricity to power more than 220,000 homes a year, based on the American Wind Energy Association’s estimate that each megawatt of wind-generated power can provide enough electricity for 225 to 300 typical American homes.

The 300-foot-tall wind turbines along ridges are visible to motorists along the Pennsylvania Turnpike and Route 22. Companies typically gain access to those choice ridgetops through long-term leases with property owners, industry representatives said.

The state ranks 16th in the nation in wind power capacity, and more projects could come on line next year, said Courtney Lane, senior policy analyst for Citizens for Pennsylvania’s Future, better known as PennFuture.

Six of the seven wind farms are spread along the Allegheny Mountains in Blair, Cambria, Centre, Fayette and Somerset counties. Those 210 turbines dot the hills from southern Fayette County northward to within about 25 miles of State College.

Pennsylvania’s topography lends itself to wind energy, said Patrick Henderson, the state’s first energy executive. "Wind energy development has been what we hoped to see. As it becomes more (cost) competitive, it will become more attractive," Henderson said.

Ridges rising above 2,000 feet are good locations for wind farms, said Gwen Anderson, director of the St. Francis University Renewable Energy Center in Loretto, because wind speeds and duration at that elevation are more constant.

About 4 percent of land in the state has strong enough winds and is available for such development, according to the Pennsylvania Wind Working Group, a coalition of industry, environment and government agencies. Because a wind farm uses only a small portion of property, the group figures the actual percentage of state land covered would be about 0.4 percent of the suitable land.

Pennsylvania also has the electric utility infrastructure to transmit power from wind farms — and the demand for electricity, said Paul Copleman, a spokesman for Iberdrola Renewables of Portland, which operates the Casselman Wind Farm in Somerset County and is completing the South Chestnut Ridge Wind Farm in Fayette County.

A National Renewable Energy Lab assessment determined wind could generate as much as 6.4 percent of Pennsylvania’s electricity needs. Wind farms provided just 0.8 percent of the state’s power last year, according to the American Wind Energy Association, an industry trade group based in Washington.

‘A significant overbuild’

The wind energy industry is growing in Pennsylvania and other states because of subsidies — production tax credits and accelerated depreciation on equipment — and because the states require utilities to offer renewable energy sources, said Jay Apt, executive director of Carnegie Mellon University’s Electricity Industry Center.

"Wind certainly is the most competitive of the low-carbon-generating technologies," Apt said.

Design advancements, such as larger blades, made wind turbines more efficient so they capture more wind and generate more power, he said.

But Apt cautions the wind energy industry faces challenges.

"There is a significant overbuild of wind nationally, in response to the production tax credit and accelerated depreciation," which allows companies to write off capital expenditures over five years instead of 20, he said.

The tax credit, which gives companies generating power from wind a 2.2-cent per kilowatt hour tax credit for the first 10 years of a wind farm’s operation, extends to other "clean energy sources" such as solar and geothermal. The wind energy tax credit is set to expire in December 2012 unless Congress passes a proposed four-year extension.

"It’s the primary incentive for the wind industry. It’s pretty critical for wind energy," said Lane of PennFuture.

Some companies are postponing plans for projects, waiting to see whether Congress acts, Lane said.

Copleman agrees that if the production tax credit ceases, "it will have a tremendous negative impact on the industry, and it will mean layoffs."

Pennsylvania helped the industry by requiring electric utilities to produce 3.5 percent of power from wind, solar, hydropower and geothermal sources. That increases to 4 percent in the fiscal year beginning in June and continues to increase by 0.5 percent annually until 2021, said Jennifer Kocher, a Public Utility Commission spokeswoman.

The state’s renewable energy standards factored greatly in the industry’s growth here, said Dan Lagiovane, a spokesman for EverPower Wind Holdings Inc. of New York, which operates the Highland Wind Project in Cambria County and is developing Highland North Wind Farm in Cambria. EverPower established an office in Lawrenceville.

Developing the wind farms is not cheap. Each turbine can cost between $2.5 million and $3 million in construction costs, as well as development costs, maintenance and payments to property owners, Lagiovane said.

Additionally, federal grants to cover part of the cost of a wind farm helped make the projects economically feasible, said David Rosenberg, Gamesa Technology Corp.’s vice president of marketing and communication. "The projects would not be done … without the incentives," Rosenberg said.

Gamesa provides about 40 percent of Pennsylvania’s wind energy capacity, either through projects it developed or those using Gamesa turbines. Gamesa’s Ebensburg plant builds windmill blades, and its Fairless Hills plant builds housing for turbine components such as the controller, gearbox and generator.

Gamesa built the Allegheny Ridge Wind Farm that spreads across ridges in Cambria and Blair counties in 2007 and the North Allegheny Wind Farm, also in those counties. It expects to complete construction of Sandy Ridge Wind Farm in Centre County early next year, Rosenberg said.

Gamesa is selling one of its newer wind farms: the Chestnut Flats atop a ridge northwest of Altoona. The company last month said it agreed to sell the wind farm to enXco, a San Diego company.

Joe Napsha, Pittsburgh Tribune-Review,