Texas has a commanding lead over other states in wind power production, as turbines supply 8 percent of the state grid’s power. But the looming expiration of a federal tax credit jeopardizes the boom — and Texas’ congressional delegation, for the most part, does not appear to be clamoring loudly to save it.
The “production tax credit,” due to expire at the end of this year, offers wind farm owners 2.2 cents for every kilowatt-hour of power they produce for 10 years. It makes wind power substantially cheaper, but is projected to cost the federal government about $1.3 billion this fiscal year. The credit has helped spur substantial development in rural Texas, especially around Sweetwater and, more recently, along the Gulf coast.
But even as the industry’s efforts to extend the credit intensify in Washington, analysts say that Texas’ Republican-dominated congressional delegation seems largely ambivalent about extending the credit (with some exceptions like U.S. Rep. Mac Thornberry, R-Clarendon, whose vast district includes the windy Panhandle and who has backed a 10-year extension).
Jimmy Glotfelty, vice president for external affairs at Clean Line Energy, a Houston company working to build transmission lines for renewable energy, said that Texas congressional Democrats mostly seem supportive from a green-power perspective, while Texas Republicans are caught between the desire for job growth in the industry and “the fiscal accountability piece of it.”
By contrast, some other wind-friendly states have vocal bipartisan backing for the credit’s extension. The entire congressional delegation of Iowa, the country’s second-ranked wind state, wrote a letter last week urging House and Senate leaders to extend the credit. U.S. Sen. Chuck Grassley, R-Iowa, has been a key backer of the extension. Seven members of Colorado’s congressional delegation, including two Republicans, wrote a similar letter last week.
Gov. Rick Perry, on the campaign trail last fall, called for an end to all federal energy subsidies, which would have included the wind credit, though he has expressed some support for its extension in the past. Perry did not join more than 20 governors, including Republicans Mary Fallin of Oklahoma, Terry Branstad of Iowa and Sam Brownback of Kansas, in writing to President Obama last July to urge extension of the credit. An extension, the governors wrote, is “critical to the health of wind manufacturing in our nation.”
The credit was signed into law in 1992 by President George H.W. Bush. Congress has extended it numerous times — sometimes after it actually expired. In years past, Glotfelty said, Texas Republicans have come down on both sides of the wind credit extension issue, which is often included in broader bills.
If the credit expires, or if an extension is delayed until after the election, wind groups warn of a major slowdown in turbine manufacturing and wind farm construction. Right now, plenty of companies are rushing to finish projects before the credit expires (though Russel Smith, executive director of the Texas Renewable Energy Industries Association, notes that in Texas, the multibillion-dollar transmission lines the state plans to use to move wind power from remote areas to big cities will not be fully built until 2013, leaving a tricky one-year gap between the tax credit’s extension and the power line completion).
John Graham, president of BP Wind Energy, said his company was having its biggest year ever in 2012, with two major wind farms — totaling more than $1 billion in investment — being built this year in Pennsylvania and Kansas. (BP Wind has four wind farms in Texas, including a new one, near Fort Stockton, that will be dedicated this month.)
However, with the uncertainty of the tax credit, “We [will] have no work to do next year at all,” Graham said. Fewer wind farms means hard times for manufacturers, so starting midyear, “you’re going to see a lot of layoffs in the manufacturing supply chain,” Graham said. So even if the credit gets extended at year’s end, it could be hard to revive the industry quickly, wind advocates say.