PTC extension starts to bring back jobs--let's make them and wind grow

Last week AWEA came out with its Fourth Quarter 2012 Market Report, highlighting figures that mark a historic year for the wind sector.   American wind energy providers brought online a record 13,124 MW of generating capacity, making wind energy the largest source of new domestic capacity—at 42 percent of the total mix—for the first time ever.  U.S. wind secured $25 billion in private investment in 2012 and ended the year with 8,380 MW of capacity installed in the fourth quarter alone, the industry's strongest quarter ever.  The country now boasts more than 60,000 MW of wind capacity—double the amount from four years ago—enough clean power to run 15 million homes. 

That's the good news. 

Yet uncertainty over federal support has caused the industry to sputter.  The threatened expiration of the Production Tax Credit at the end of 2012 had wind farm developers scrambling to bring their new projects online in time to take advantage of the incentive—hence, wind's epic fourth quarter.  While wind turbines were going up in historic numbers, the industry shed thousands of manufacturing jobs.  With the fate of the PTC in the hands of a fickle and fractious Congress, factory orders slowed precipitously and companies up and down the supply chain cut more than 3,240 jobs across seventeen states.

Danish turbine manufacturer Vestas Wind Systems announced last summer a 20 percent cut in its American workforce—800 jobs gone from its factories in Pueblo and Brighton, CO, its U.S. headquarters in Portland, OR, and research facilities in Houston, TX, Louisville, CO, and Marlborough, MA.  PTC uncertainty forced Siemens Wind Energy, a subsidiary of the German energy giant, to lay off 945 employees, or half its U.S. workforce, from blade manufacturing plants in Fort Madison, IA and Hutchinson, KS and at its headquarters in Orlando, FL.  Local economies are taking the effects of congressional dithering on the chin, as some of their largest employers suddenly downsize.  With American wind farms now sourcing more than two thirds of their components domestically, the harm to economic activity ripples through the country.

That's the bad news.

Fortunately, in its 11th-hour fiscal cliff deal, Congress extended the PTC for all wind projects that break ground in 2013.  The extension will save an estimated 37,000 jobs in the domestic manufacturing sector and has already revived nearly 500 facilities in all 50 states.  Siemens has recalled 18 workers to its Fort Madison plant and announced this week that it plans to bring back an additional 73. “The PTC extension gives us confidence as we rehire employees,” says Susan Beckman, a Siemens spokeswoman. 

With similar confidence, Vestas announced last month that it will ramp up its tower-producing factory in Pueblo, CO, and hire 100 workers in the first quarter to manufacture towers for third-party wind farms. “The extension of the Production Tax Credit at the beginning of the year,” says Tony Knopp, Vesta's Vice President at the Pueblo plant, “was a key factor in securing this contract.” 

These are green shoots growing from scorched earth.

First Wind, an independent Boston-based renewable energy company, is acting even more bullish in response to the PTC extension.  The firm currently operates some 1000 MW of wind projects, and announced last month that it hopes to increase its wind operations by 50 percent or more in the next two years. “With the passage of the wind energy tax credit extension, First Wind and other wind energy companies have predictable federal policy in place that will allow for millions of dollars of investment in local communities over the next few years,” says Paul Gaynor, CEO of First Wind.  The company brought five wind farms online in 2012, projects whose construction and development has employed nearly 1,000 workers.  With “several projects” becoming shovel-ready by the end of this year, First Wind will continue to create American jobs in 2013 and beyond.

A typical 205-MW wind farm generates 1,079 jobs over its lifetime, according to a recent NRDC study.  In addition to sustaining 75,000 jobs in the U.S., American wind turbines avoid 96 million tons of CO2 emissions annually, the equivalent to taking 17.5 million cars off the road.   Why would the federal legislature derail such a potent engine of growth and energy independence?  Hasn’t the wind sector demonstrated that wind is too important for our economic and environmental well-being for it to be taken hostage every year?  The PTC extension was, of course, a necessary and positive step.  But only long term policy certainty can nurture long term growth, profitability, and stability.

“Wind energy can be competitive on its own merits, with or without the PTC,” declares Dan Oberle, General Manager of Global Blade Technology (GBT) USA, the Indiana-based molds, tooling, and turbine blade production division of its Dutch parent company. “The real problem,” he says, “is the uncertainty."[1] Congress can help the wind industry continue its impressive growth by following AWEA's recommendation and extend the PTC through 2018, with the current 2.2 cents per kilowatt-hour subsidy decreasing by 10 percent each year through 2017, bringing the credit to 60 percent for its final two years of existence.  In its phase out proposal to Congress, AWEA maintains that “With the policy certainty that accompanies a stable extension the industry...can achieve the greater economies of scale and technology improvements that it needs to become cost-competitive without the PTC.” 

While we wait for Congress to act, wind industry companies give us signs to be cautiously optimistic.  Factories and builders are rehiring workers they were forced to lay off and developers have new wind projects in the pipeline.  Even oil companies understand that renewable energy will continue to be the nation's fastest growing energy source for the foreseeable future.  It remains to be seen if our political leaders have gotten the memo.

[1] Personal correspondence with Dan Oberle, General Manager GBT USA. October 18, 2012.