Exec predicts dead calm for U.S. wind energy generation

Exec predicts dead calm for U.S. wind energy generation

Summary: The fate of the production tax credit, which applies to wind-generated power, is caught up in now-habitual Washington deadlock.

TOPICS: Banking

The CEO of giant wind turbine maker Vestas predicted a steep drop-off in wind technology projects after this year, when the U.S. production tax credit expires, according to a report from Thomson Reuters.

"In the United States, the market this year is very, very busy," Thomson Reuters quoted Vestas CEO Ditlev Engel, who spoke with a gathering of European ministers and senior officials over the weekend. "But because of the potential lapse of the regulatory framework in the U.S., this market will probably go down 80 percent next year."

The production tax credit helps encourage the use of wind-generated energy by providing the facility with a 2.2-cent per-kilowatt-hour benefit. Apparently, the last time the credit was discontinued, the market fell 75 percent from year to year.

The chances of the production tax credit being renewed during what has already become an incredible contentious election year are really pretty minimal -- especially since energy has become one of the hottest potential debate areas.

The presumptive Republican candidate, Mitt Romney, supports policies that would "rapid progress in the development of our domestic reserves of oil and natural gas and allow for further investment in nuclear power. He has taken a hostile position against green technologies that he believes are too unproven for serious investment.

On his Web site, the candidate writes:

"We should not be in the business of steering investment toward particular politically favored approaches. That is a recipe for both time and money wasted on projects that do not bring us dividends. The failure of windmills and solar plants to become economically viable or make a significant contribution to our energy supply is a prime example."

The Obama administration continues to tout a strategy that reduces the United States' dependence on oil, promotes energy efficiency and invests in a clean energy future. But, realistically, it is hard to see how any progress will be made toward that goal in a continually deadlocked Congress. The only thing that the two parties seem to agree upon is the fact that anything with the word "efficiency" in the title seems to be a good idea.

And so, in 2013, wind generation could fall to approximately 2 gigawatts, compared with 11 gigawatts in 2012, according to Vestas' worst case projections.

The company is making these disclosures as it prepares to cut 2,335 jobs in Europe; approximately 1,600 U.S. jobs could be axed if the production tax credit ends, according to the company.

I don't usually get political in this blog, but the sad part of this particular scenario is that we are talking about wind projects that are already in production, not just some technology that is on the drawing boards or in pilot projects. Yet, apparently Congress is willing to leave those projects twisting in the wind, while continuing to pay out billions of dollars in subsidies for oil, gas and coal production.

[via Thomson Reuters]

Topic: Banking

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  • He should help

    Mr. Engel could help. According to an article in The New York Times, the average cost to generate a kWh of electricity with wind turbines is 9.9 cents. Instead of asking the taxpayers in various countries to support his prices, why not cut his prices by 10%? Then the taxpayers would only have to cough up a subsidy of 1.1 cents per kWh instead of 2.2 cents.

    I don't believe it's impossible to find 2.2 cents per kWh in cost savings building these turbines. If his engineers could do that, his turbines wouldn't need taxpayer subsidies at all, and his sales wouldn't be dependent on the ebb and flow of the political cycle. But instead of doing that, he's out crabbing to Reuters about poor Vestas not being able to survive unless the taxpayers help him keep his prices up.
    Robert Hahn
  • The mean Republicans?

    The wind farms in Oregon and Washington had to stop sending power to BPA (Bonneville Power Administration) last year because of a huge surplus in power. They simply didn't want any more being added to the grid. So even if the federal incentives evaporate, the turbines are still turning and producing power. In the meantime we are still sending billions of dollars to the middle east, aren't we? Of course we are. Since our cars don't run on electricity yet it would be a great idea to continue to develop oil and natural gas domestically. Let's not suggest that if only it wasn't for those mean Republicans, the president could continue his efforts to force the market to accept energy sources we are not ready or able to use.
  • There are plenty of places that need power...

    if BPA didn't need it, they could sell it.

    As for US domestic oil production: http://www.businessinsider.com/us-oil-production-has-boomed-under-president-obama-2012-6

    And before anyone mentions the Keystone XL pipeline, you should be aware that the oil from that pipeline is not for the domestic market: http://switchboard.nrdc.org/blogs/aswift/keystone_xl_is_a_tar_sands_pip.html
  • Neener^2

    When it comes to politics, My Guys are doing everything right. Your Guys are evil, corrupt, and mean, and they screw up everything they touch. So there.
    Robert Hahn