Even with an extension of a tax credit for wind
development, installations will fall precipitously
in 2013, a renewable energy investment expert told a
Senate committee.
And if the production tax credit (PTC) is allowed to
expire at the end of 2012, wind development will
practically disappear next year, said Ethan Zindler,
head of policy analysis at Bloomberg New Energy
Finance, a market research firm.
The Senate Subcommittee on Energy, Natural
Resources, and Infrastructure held a hearing Tuesday
to investigate the impact tax credits has had on
renewable energy investment and manufacturing
employment.
With the credit in place for this
year, wind installations will approach a previous
record, as developers try to beat the deadline for
new projects to be put in service this year to
qualify.
“Bloomberg New Energy Finance forecasts
approximately 9,500MW of new power-generating
capacity will be installed in 2012 but just 500MW
will be installed in 2013. That would see the
industry go from registering one of its best years
on record in terms of installations to its worst
since 2004,” Zindler said.
The PTC has expired three times in the past 12
years, each time causing project development to
crater until it was restored.
Zindler said the
global market for clean energy investment is
marching strongly ahead, even with policy
uncertainty plaguing U.S. industry. He said last
year, the industry set a record, attracting $260bn
in new outside investment, up from $54bn in 2004.
“In the fourth quarter of last year, we counted the
one trillionth dollar of new investment in clean
energy.
"If there's a single theme that can be
discerned from this it's that where supportive,
clearly defined policies are implemented, private
capital follows,” he added, citing trends in Germany
and China.
But companies depended on relatively
stables policies in recent years to expand their
wind manufacturing footprint.
Now, the U.S. has over 13GW of final turbine
assembly capacity.
One such company is Leeco
Steel, whose vice president for wind energy, John
Purcell, testified that wind is a significant part
of the company, supplying turbine tower
manufacturers and their suppliers in 12 states.
“Leeco Steel first began delivering steel plates and
fabricated plate products into the wind industry in
2004. Revenue from the wind industry now accounts
for nearly 40% of our company’s total revenue,” he
said.
With stable policy and the PTC, he said that
overall, the wind industry has 12 tower factories,
10 of which were added since 2002.
“Taking an
average of 250 employees per factory, that is 2,500
new good paying jobs that were created in a very
short amount of time within our supply chain alone.
This does not take into account the thousands of
additional jobs that exist in the supply chain that
supplies goods and services to each of these 12
factories,” Purcell said.
Further expansion at Leeco may not move forward, he
added.
But Benjamin Zycher, a visiting scholar at
the American Enterprise Institute, said the low
energy content of sun and wind are an inefficient
use of capital, and that subsidies should be
eliminated. He also said the overall economic impact
of subsides are a negative, despite the perceived
job creation.
“The premise that expansion of renewable power will
yield an increase in ‘green employment’ confuses
benefits for a particular group with costs imposed
upon the economy as a whole, and fails to
distinguish between employment growth in the
aggregate and employment shifts among economic
sectors,” he said.
And the emergence of cheap natural gas only makes
matters worse.
“The market difficulties faced by renewables are
likely to be exacerbated by ongoing supply and price
developments in the market for natural gas, which
will weaken further the competitive position of
renewable power generation. At the same time,
subsidies and mandates for renewables impose
nontrivial costs upon the taxpayers and upon
consumers in electricity markets,” Zycher added.
“The upshot is the imposition of substantial net
burdens upon the U.S. economy as a whole even as the
policies bestow important benefits upon particular
groups and industries, thus yielding enhanced
incentives for innumerable interests to seek favors
from government.”
The argument will be played out in the large
political context, as moves to extend the PTC beyond
2012 are still afoot in Congress.
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