OAKESDALE, Wash. – Those giant wind turbines that line ridges across the Northwest have brought green energy and construction jobs to many rural areas. But some of those jobs could disappear next year. That’s if Congress does not extend a production tax credit that expires in December.
Wind developers say the money is critical to the burgeoning industry. But critics say taxpayers should not subsidize wind energy.
Wind farm construction is ramping up across the country, as companies race to erect turbines before Dec. 31. That’s when the production tax credit, also known as the PTC, is set to expire.
So, here’s how it works: Right now wind producers receive a tax 2.2 cent credit for each kilowatt-hour of electricity they create. Many wind industry analysts say the production tax credit is keeping developers afloat. It’s also putting people to work building and installing wind turbines.
Some of those newly built turbines line a hilly ridge on Washington’s Palouse. A few bladeless towers dot the horizon.
“They won’t be that way for long,” said project manager Aaron Pedigo.
Blades the size of semi-trucks lay on the ground. Wind whips around, slightly bending them back and forth. Pedigo points to what looks like a large yellow jaw biting down on one of the blades. It’s sort of like a tong made specially for the blades.
“It’s a blade gripper,” Pedigo explained. “Instead of installing the blades on the ground, they’ll actually install one blade at a time.”
That’s one 17,000-pound blade at a time. Pedigo said this new technology speeds up construction time. Right now Palouse Wind farm’s 17 yet-to-be-finished turbines look like giant toothpicks sticking out of the ground. But Pedigo said they’ll be up and running in a few weeks. Well on track for the deadline.
That does little to help next year’s jobs. As wind developers continue to feel uncertain about subsidies, they halt building plans. That hits the wind construction and manufacturing sectors hard.
“I think 2013, I’ve not really talked to anybody that’s told me they have something hard on the books for next year. And I think a lot of people are wondering if their jobs are going to be around for next year,” Pedigo said.
This debate comes at a time when more American jobs than ever depend on the wind industry. Wind turbine manufacturing companies have steadily opened up in the U.S. in the past decade. Before, parts came from China, Indonesia or South America. Pedigo said all Palouse Wind Farm parts came from Colorado.
Supplies are shipped from Colorado by rail to Pasco, Wash. They’re then trucked three hours northeast to the construction site. Pedigo said not dealing with ports and international shipments has kept construction on track.
But 2013 could be a different story. Keeping wind manufacturing in the states may be more difficult next year. One wind tower manufacturing company in the Pacific Northwest is Katana Summit. It employs 79 workers in Ephrata, Wash., and more than 200 in Nebraska.
CEO Kevin Strudthoff said the plant has received zero orders for 2013. That’s forcing Katana Summit to look for a buyer –- or close its doors Nov. 1. Strudthoff is frustrated.
“The industry has been through this before, where we face the expiration of the PTC, and the industry just falls off a cliff. And for whatever reason, our folks in Washington don’t seem to get what that means to jobs out in the field,” Strudthoff said.
Katana Summit is not the only manufacturer to have to lay off workers this year. Most recently, Siemens Wind Power, a major manufacturing company, announced more than 900 layoffs in Kansas, Iowa and Florida.
More workers in the Pacific Northwest could also face layoffs. Danish wind company Vestas will layoff more than 3,700 employees worldwide. It’s North American sales and service headquarters is based in Portland.
Congress enacted the production tax credit in 1992. The credit has expired three times. In each case, it’s eventually been restarted. According to the industry’s trade group, the American Wind Energy Association, wind project construction has dropped dramatically every year the credit has ended.
The credit last expired in 2004. Then, construction dropped 77 percent. If it expires this December, industry analysts predict it will halt completely.
Justin Sharp owns the wind energy consultancy Sharply Focused in Portland and spent 7 years at Iberdrola Renewables. He said, right now, the wind industry cannot survive without the production tax credit.
“To me it seems like really short-sighted policy to essentially be, really, be cutting the legs off from underneath of an industry, which could have so much prospect for helping with our energy security,” Sharp said.
Sharp said he disagrees with how the credit is implemented. He thinks it creates market distortion – where the industry has to generate energy to receive the credit, even when energy is not needed. But Sharp said the PTC is necessary, unless the United States has a carbon tax or a national renewable portfolio standard.
But critics say the credit is nothing more than a welfare subsidy for the wind industry. Benjamin Cole is with the advocacy group American Energy Alliance. It’s funded in part by the oil industry and has lobbied against the credit. Cole said wind energy needs to stand on its own two feet.
“The problem with the production tax credit, and the lobby that comes to Congress every year is: they always want one more year. They want five more years. Can you extend it for 10 more years?” Cole said.
But wind energy advocates say all other forms of energy get help from taxpayers. The difference is, those incentives are permanent — advocates don’t have to defend them to Congress every few years.
The wind credit must be renewed every year or two. Peter Kelly is a spokesman with the American Wind Energy Association. He said wind energy has only had a continuous tax credit for seven years. Kelly said that really grew the industry.
“To do without any incentive – in the face of all the many incentives for other forms of energy – the industry is just not at that point yet. Every year we’re more cost competitive, but we need to finish the job of basically creating a new industry,” Kelly said.
Back on the Palouse Wind project, project manager Aaron Pedigo stands under a giant crane that will lift the turbine blades 262 feet in the air. That’s about 24 stories high. He said wishes the production tax credit was steadier, less like working on a roller coaster ride.
“It would sure put the minds to ease of a lot of people who are out here working now – and working hard now – that don’t know where their next assignment will be,” Pedigo said.
Right now it looks like the production tax credit will not be considered until after the election.
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