Wind Industry Secures Tax Credit, But Damage May Be Done
The wind energy industry is dependent on something even more unpredictable than wind: Congress. Hidden in the turmoil over the "fiscal cliff" compromise was a tax credit for wind energy.
Uncertainty over the credit had lingered long before the last-minute political push, causing the industry to put off further long-term planning. So while the now-approved tax credit revives prospects for an industry facing tens of thousands of layoffs, don't expect to see many new turbines coming up soon.
Growing Uncertainty
Mark Goodwin, head of developer Apex Wind Energy, says his company was "on pins and needles" over the "fiscal cliff" negotiations. It was worried about extension of the tax credit, which keeps wind energy prices competitive with electricity produced from fossil fuels.
"Without the [tax credit], the cost of the wind energy for a specific project is going to be about a third higher," Goodwin says.
Congress renewed the tax credit for a year, but the industry had no idea which way it would go, so it had to prepare for the worst. Nobody wanted to gamble on starting a project that wouldn't be competitive. So after rushing to complete as many projects as possible before the tax credit expired, developers stopped planning for the future. Some companies had to lay off workers. Some manufacturers went bankrupt.
Apex stopped hiring and tried to hold on to the workers it had.
"Apex has 60 people, so we really had to push the 'I believe' button to keep them on payroll that the policy would come back," Goodwin says.
So while there is a tax credit now, there won't be many new wind farms coming up in 2013. That's the downside.
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