That tax credit of 2.2 cents per kilowatt-hour is set to expire at the end of the year unless Congress renews it. Few disagree that failing to extend it will cause great harm to the industry just as it is beginning to flourish.
Much worthwhile legislation has been stalled in Congress for partisan reasons, but few matter more to West Texas than the wind-energy Production Tax Credit.
In fact, just the uncertainty over its future already is having an impact. Companies have cut back to the extent that, even if the tax credit is renewed, new power generation next year will be a fraction of this year’s production.
Wind-power companies already have laid off thousands of workers. If the tax credit lapses, a report by an industry trade group estimates 37,000 jobs will be lost next year. Conversely, renewing it would mean an additional 57,000 jobs over the next four years.
Not only that, it raises the question about the future of the clean-energy source, which provided about 8.5 percent of Texas’ electricity last year and is set to become an increasingly larger piece of the energy pie.
The tax credit provides wind-power companies about $1 billion a year, but it brings in many times that amount in private investment — or at least it does when there’s financial certainty.
In earlier times, this would be an issue where Republicans and Democrats in Texas and other states where the industry has a big impact could come together on legislation that would benefit their constituents.
But Greg Wortham, executive director of the Texas Wind Energy Clearinghouse in Sweetwater, says political polarization has stalled progress on resolving the issue: “The president is for it, so (Republicans) are against it.”
The impasse should alarm people in many West Texas counties that have reaped great financial rewards from the giant wind turbines that have sprung up across the landscape in recent years. Schools especially have benefited enormously — for example, children who attend 12 years of public school in Sterling City are guaranteed $36,000 for college or technical training.
In San Angelo, Hirschfeld Energy Systems, which manufactures wind towers, surely will have a better chance of maturing into a successful company if the tax credit exists to help provide stability to the industry.
And that stability is the key. The tax credit already has lapsed three times over its two-decade history, stalling the industry’s progress and unnecessarily causing boom-and-bust periods.
There’s room for compromise if lawmakers will seek it. U.S. Rep Mike Conaway, who represents San Angelo and much of the Concho Valley, favors a “gradual phaseout” of the credit, and that’s a reasonable approach that even many in the industry support.
Bloomberg New Energy Finance estimates that wind energy can reach “grid parity” — the point where the cost of the energy is the same as the baseline price of power on the grid — by 2016. If that is so, it would mean the industry could stand on its own.
But achieving that would mean companies would need to know the rules, and that requires Congress adopting a long-term policy free of partisan and other interruptions.
Give the wind industry some certainty, and then stand back and watch the turbines spin.