Texas Wind Boom Threatened By Expiring Tax Credit

Editor’s Note: EarthTechling is proud to repost this article courtesy of the Texas Tribune. Author credit goes to Kate Galbraith.

When Brad Sawyer graduates next spring from Texas State Technical College in Sweetwater, he hopes to get a job as a wind turbine technician, working on the towering three-bladed machines that dot the West Texas countryside.

“I think that the jobs will be there,” said Sawyer, who is in the wind energy technology associate’s degree program. However, he added, if the federal government changes its policy on wind power, things could get “pretty tight.”

Texas wind industry

image via Shutterstock

Sawyer and wind power companies are closely watching developments in Washington, where a tax credit benefiting wind farms is due to expire at the end of this year. If Congress does not renew the credit, the implications could be especially significant in Texas, the top wind power state, which contains about a fifth of the nation’s turbines and is building expensive transmission lines to support more growth. Some of the state’s leading Republicans, despite advocating for wind power in the past, are doing little to aid it now.

“We haven’t had the industry come to a stop like this before in a long, long time,” said Walt Hornaday, president of Cielo Wind Power, an Austin-based wind farm developer. His company is pursuing work in other countries, but otherwise, he said, “we would definitely be looking at very large layoffs.”

Federal tax policies lie at the heart of the industry’s woes. An incentive called the production tax credit, in existence since 1992, expires in December. It allows wind farm owners to lower their tax bills in exchange for producing electricity. Wind companies want Congress to extend the credit, as has happened many times before, to sustain their emissions-free and drought-proof energy source. But a growing number of Republicans, including presidential nominee Mitt Romney, are pushing back against green energy subsidies.

 

“This is the first time a presidential nominee of a major party has come out against the extension,” said Andy Bowman, president of Pioneer Green Energy, an Austin-based renewable energy developer.

U.S. Sen. John Cornyn, R-Texas, who has approved extensions of the credit in the past, voted in the Senate Finance Committee in August against a bill containing a one-year extension. (The extension passed the committee but remains stuck in Congress.) However, he would back a one-year extension if the tax benefits were reduced by 20 percent.

“People are starting to question, and that’s a good thing, but it’s taken a long time,” said Patricia Lapoint, who lives near a West Texas wind farm and has been fighting the industry for years.

Jessica Sandlin, a spokeswoman for Cornyn’s office, said in an email that he “believes Congress must undertake real, comprehensive tax reform rather than a piecemeal approach.”

Of the U.S. Senate candidates from Texas, Ted Cruz, the Republican nominee, said in an e-mailed statement that he wants to “develop all forms of energy” but is “not a supporter of government subsidies.” Paul Sadler, the Democratic nominee, who until recently served as executive director of a wind power lobby group, backs renewal of the credit, which he described in an email as an “effective tool encouraging growth of this clean and sustained energy source.”

Gov. Rick Perry, viewed as a wind power stalwart for championing transmission lines and signing a renewable energy mandate in 2005, now emphasizes the need to remove all federal energy subsidies — a popular talking point among Tea Party supporters.

Because wind farms must begin operating this year to be eligible for the credit, which they can then claim for 10 years, developers are rushing to finish wind farms. Next year, activity is expected to drop sharply. Construction is especially busy in parts of South and North Texas, according to Bowman. West Texas, where thousands of turbines are already operating, has seen activity slow while more transmission lines to carry the power get built, he said.

Some wind experts think the credit extension will ultimately pass Congress, albeit after the November election, because it has strong bipartisan support in other windy states (if not Texas). But others do not, and the industry is left to bemoan the difficulty of long-term planning. A one-year extension could mean the wrangling resumes next year. Hornaday said that Texas could benefit more than other states from a one-year extension because there are fewer rules here, making wind farms easier to build.

 

If permitting obstacles surface in other states, “I can always pick up the turbines and put them in Texas,” Hornaday said.

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