Keeping tax credit is key to wind power projects

Recently, The Spokesman-Review carried a series of articles about wind power, one of the nation’s most sustainable energy sources and an economic engine for many regions, including the state of Washington. The articles were interesting and timely, as Congress currently faces a critical decision on the industry’s future.

That decision is whether to renew the federal wind energy Production Tax Credit, a key incentive scheduled to expire at the end of 2012. The PTC, which provides a tax credit to a wind farm’s owner based on the amount of electricity it produces, has helped the U.S. wind turbines industry expand dramatically over the past decade, and leverage an average $17 billion annually in private investment for the past four years.

Here in Washington, wind farms now power the equivalent of more than 600,000 homes, pay more than $6.5 million each year to farmers, ranchers and other landowners, and contribute more than $13.5 million annually in property taxes to rural counties – even though only one-eighth of our state’s full wind potential has been developed.

Cannon Power Group’s Windy Point/Windy Flats wind farm project, located in southern Washington, represents one of the largest wind energy projects in the United States. On completion, it will have a generating capacity of 500 megawatts – enough clean electricity for over 250,000 households per year.

As the PTC has helped the wind industry grow, it also contributed to our project, creating 353 construction jobs – 75 percent from the local community – 35 permanent jobs, and about $145 million generated for the local and state economy. The story of our company’s success is only one of many in this emerging industry.

But in addition to its rural economic development benefits and its generation of pollution-free electricity, wind energy is an American manufacturing success story. Over the last six years, U.S. domestic production of wind turbine components has grown 12-fold to more than 400 facilities in 43 states, shifting manufacturing jobs from overseas back to the U.S.

Today, 60 percent of a typical wind turbine’s content is American-made, up from 25 percent in 2005. With the support of a stable PTC, wind turbines is powering one of America’s fastest-growing manufacturing sectors.

A new study from Navigant Consulting finds that with stable tax policy (that is, a continuation of the PTC), the wind industry can create and save 54,000 American jobs in the next four years, and expand the wind manufacturing sector by one-third to 46,000 American manufacturing jobs.

That will be a major step toward the industry supporting 500,000 jobs by 2030, as envisioned in a U.S. Department of Energy report during the George W. Bush administration.

The bad news: Navigant also finds that these jobs could disappear if Congress allows the Production Tax Credit to expire. Letting the credit lapse would, in effect, impose a targeted tax increase on the wind industry, resulting in the loss of almost 40,000 American jobs.

Raising taxes on wind energy would also cut American wind manufacturing jobs by one-third, while private investment in the industry would drop by nearly two-thirds, according to Navigant. Such results would also have great impact on Washington’s economy.

Time is short; much shorter than the credit expiration date of Dec. 31, 2012, would suggest. Why? Because wind turbines and their components take time to manufacture, and the companies that make them need lead time to plan and carry out their production schedules.

What this means is that some Pacific Northwest workers are already losing their jobs, and job losses and layoffs will accelerate with each month the PTC moves nearer to expiration. Without any certainty about tax policy in 2013, orders to American wind manufacturers for turbines have essentially dropped to near zero. Congress must act now.

Reps. Dave Reichert, R-Wash., and Earl Blumenauer, D-Ore., have introduced bipartisan legislation, H.R. 3307, the American Renewable Energy Production Tax Credit Extension Act, to extend the wind energy PTC for four years, until the end of 2016. The Reichert-Blumenauer bill has attracted the support of 36 co-sponsors, including 11 Republicans. In the Senate, Maria Cantwell, D-Wash., is championing a PTC extension.

A vote for a PTC extension is a vote for continuing wind power’s American manufacturing success story and for clean, homegrown, affordable energy resources.

Thanks to Rep. Reichert and Sen. Cantwell for realizing this, and for their national leadership on this vital issue. There is still time for Congress to recognize the value of this critical growing industry by extending the PTC.

By Gary Hardke, president and managing director of Cannon Power Group, an independent renewable energy company.