The U.S. wind energy industry breathed a sigh of relief earlier this month when Congress voted to renew a tax credit that could be worth up to $12 billion over the next decade.
The tax credit comes as a major boost — but the headlines don’t tell the full story about a struggling industry. Jobs that were cut last year have yet to be replaced. And wind energy faces growing competition from the cheap natural gas that’s abundantly available across the United States.
In some ways, 2012 was a remarkable year for wind energy. It was the first time that wind energy was the number-one source of new power added to the electricity grid in the United States.
Fort Felker, director of National Wind Technology Center, said, “Forty-two percent of all new power that was added to the grid in 2012 was from wind energy — ahead of natural gas, ahead of all the other fossil fuels.”
Fort Felker runs a team of government wind energy researchers in Colorado who work in close partnership with industry leaders across the nation. Their goal: to develop techniques and technology to make wind energy cheaper. But the dropping prices of other energy sources has made it hard to keep up.
Fort Felker said, “The bad news is that, for many years, our target in the wind industry was to beat coal. To be cheaper than coal. And therefore lead to wind being the most desirable source economically. Well, we’ve done that. Wind is cheaper than coal power. But now of course natural gas has come in much less expensive than coal. So the target has been pushed lower.”
For now, the U.S. wind industry is highly dependent on subsidies — in the form of a U.S. federal tax credit.
The tax credit was renewed at the end of last year — but fears that it could expire led to major jitters, with companies halting new orders and production firms cutting hundreds of jobs. Here in Colorado, the company perhaps worst hit by the uncertainty was wind-turbine manufacturer Vestas.
Hundreds of employees were laid off and others went on a reduced work-week subsidized by state funds.
Susan Innis, senior manager of Vestas Public Affairs, said, “We do have some of our employees on what’s called a workshare program, so they’re working reduced hours. And that’s a state of Colorado program that allows us to keep our employees on board. We spend a lot of time training employees how to build wind turbines, so we want to retain those skills. So when we see the market start to pick back up, we can hopefully bring them back to full-time.”
For now, both state and federal subsidies are keeping companies like Vestas afloat in the U.S. market…But the American Wind Energy Association is optimistic, forecasting that wind WILL be able to compete with coal and natural gas without government help by 2018.