Tax credits in doubt, wind power industry is withering

New York TimesSeptember 20, 2012 

— Last month, Gamesa, a major maker of wind turbines, completed the first significant order of its latest innovation: a camper-size box that can capture the energy of slow winds, potentially opening up new parts of the country to wind power.

But by the time the last of the devices, worth more than $1.25 million, was hitched to a rail car, Gamesa had all but shut down its factory here and furloughed 92 of the workers who made them.

“We are all really sad,” said Miguel Orobiyi, 34, who worked as a mechanical assembler at the Gamesa plant for nearly five years. “I hope they call us back, because they are really, really good jobs.”

Similar cutbacks are happening throughout the U.S. wind sector, which includes hundreds of manufacturers, from multinationals that make giant windmills to smaller local manufacturers that supply specialty steel or bolts. In recent months, companies have announced almost 1,700 layoffs.

At its peak in 2008 and 2009, the industry employed about 85,000 people, according to the American Wind Energy Association, the industry’s principal trade group.

About 10,000 of those jobs have disappeared since, as wind companies have been buffeted by weak demand for electricity, stiff competition from cheap natural gas and cheaper options from Asian competitors. Chinese manufacturers, who can often underprice goods because of generous state subsidies, have moved into the U.S. market and have become an issue in the larger trade tensions between the two countries. In July, the U.S. Commerce Department imposed tariffs on steel turbine towers from China after finding that manufacturers had been selling them for less than the cost of production.

And now, on top of the business challenges, the industry is facing a big political problem in Washington: the Dec. 31 expiration of a federal tax credit that makes wind power more competitive with other sources of electricity.

The tax break, which costs about $1 billion a year, has been periodically renewed by Congress with support from both parties. This year, however, it has become a wedge issue in the presidential contest. President Barack Obama has traveled to wind-heavy swing states like Iowa to tout his support for the subsidy. Mitt Romney, the Republican nominee, has said he opposes the wind credit, and that has galvanized Republicans in Congress against it.

In North Carolina

Two major wind farms have been proposed in North Carolina, but it’s not clear whether either will ever be built, even though the state is known for having some of the best wind resources along the East Coast.

The proposed 300-megawatt Desert Wind Energy Project near Elizabeth City was approved by state utility regulators in 2011, but Spanish developer Iberdrola has not been able to sign a long-term power contract with Progress Energy, Duke Energy or any other potential buyer for the output of the wind farm. The company has signed leases to built turbines on local farms and so far has not backed out of the project, which is proposed over a 31-square-mile area in Pasquotank and Perquimans counties.

This year, the N.C. Utilities Commission approved the 80-megawatt Pantego Wind Energy project on 11,000 acres in Beaufort County. Proposed by Chicago-based Invenergy, Pantego could pose a mortal threat to bald eagles that nest, hunt and forage in the area, according to preliminary estimates.

Additionally, the Seymour Johnson Air Force Base has warned that the wind farm would interfere with flight training routes for F-15E Strike Eagle fighter jets.

Invenergy officials have not given up on the project and think they can make accommodations.

Staff writer John Murawski contributed.

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