- Category: Wind
18 Sep 2012
- Published on Tuesday, 18 September 2012 12:47
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Extending tax credits for wind energy would reduce dependence on foreign oil, reduce the price of oil and gas, and create American jobs, according to a report from Zpryme.
Renewing the tax credits, specifically the Production Tax Credit for wind, would create over 50,000 jobs on top of the existing 75,000 jobs in the wind sector raising the number to almost 130,000 new energy jobs, the report estimates.
“Historical evidence shows a $5 billion governmental investment creates $17 billion in private sector investments benefiting both the industry and the economy,” says the report’s author Megan Dean, Zpryme Senior Research Analyst.
The Democrats, led by President Obama, support the plan to extend the tax credits to aid the growth of the wind power industry, while the opposing Republican Party led by candidates Mitt Romney and Paul Ryan claim the industry is an unreliable and unprofitable industry and want to allow the credits to expire.
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The latter’s reason is they believe the wind power industry will be self-sufficient and won’t be needing the tax credits by 2016, as long as the Production Tax Credit continues by then. In relation to that, wind generation increased 27% over the last year, allowing it to become the second most competitive of all renewable energy sources, behind hydro power.
“In 4 years, wind energy will reach the point of grid parity, where wind energy will be cost competitive with traditional energy generation,” said Ms. Dean.
Meanwhile detractors of the tax credit argue that they have been in place for 20 years without success, and that wind energy creates fewer jobs than other industries such as coal and oil. Mr. Romney also believes that it is the right time for wind to stand on its own, without the help of the government.
“As the political discussions heat up over governmental tax credits for wind, party lines are becoming more drawn and polarized with less cooperation between political parties,” Ms. Dean said. “For the time being this gridlock is unlikely to be resolved before the November election, as passing several steps is necessary in the political arena before proposals are approved.”
Just before the tax credits expire, wind power manufacturers are hurrying to complete current projects before December 31, as only completed projects would receive the production tax credit for this year. While it would increase wind production for 2013 and beyond, further deployment is expected to stall until the issue is resolved.
In relation with this, economic uncertainty of the industry has started to cause problems due to changing plans from long-term development to short-term completion. Construction in 2013 is seen to decline to only 1,500 megawatts if the credits are not renewed.
If ever the credits do get extended, 750 MW would be lost due of the time required to plan and secure the resources for new construction, as well as lease expiration clauses. Turbine and development firms have begun layoffs due to already reduced demand – with an estimated 37,000 jobs to be lost, according to the American Wind Association. Turbine demand is seen to decrease 80% in the US, and firms have started to look for customers in Canada, Mexico, and Latin America to compensate for the decrease in demand.
The US Congress has previously allowed the tax credits to expire, at 3 times in the last 20 years – in 2000, 2002, and 2004. Substantial growth rate reduction, significant job loss, delayed developments, and uncertainty in profitability always followed, together with energy installation decreases.
“Clearly, reducing the PTC will reduce jobs, reduce wind installations, and reduce demand for the sustainable energy source,” Ms. Dean continued. – EcoSeed Staff