Failed tax credit extension will result in massive wind industry layoffs
The U.S. wind power industry is reeling after Congress failed to renew a tax credit that provides an income tax credit of 2.2 cents per kilowatt-hour for electricity produced by wind turbines.
Proponents of the tax credit extension for wind power tried to “tuck” it into a bill that would extend payroll tax cuts, but it was dropped by congressional leaders on Thursday.
Wind industry experts believe this will result in major layoffs across the country–as many as 37,000 in 2012 alone–particularly in the Midwest which is home to hundreds of companies related to the industry. Illinois, for example, hosts over 150 companies with 67 involved in the manufacturing or production at some level of equipment for wind turbine construction.
Although there is some hope that the credit will be revived later in the year, many believe that it will be too late by then to save the jobs lost in the mean time, or revive the stalled or abandoned wind projects that were in process prior to this week’s news.
Fifteen wind projects in the Midwest are in immediate jeopardy. Many other projects that wouldn’t come online until 2013 or later will likely be effected as well, although the number is uncertain. The industry generally views permitted projects as an indicator of what is likely to be constructed in the near future. This is due to the fact that long-lead times associated with obtaining necessary permits means that developers don’t usually apply for said-permits unless they’re quite certain about a project’s potential. It regularly takes anywhere from two to five years to bring a wind project to fruition.
Washington insiders say that it isn’t likely that a wind production tax credit extension will see the light of day before November’s elections. To qualify for the expiring tax credit, existing developers need to have their wind turbines generating power before the end of this year.
Because of the deadline associate with the expiring tax credit, 2012 will likely be a record-breaking year for the industry, even as the outlook for 2013 is bleak at this point in time.
