Report sees a wallop to wind power if tax credit ends

Wind energy is powering new investments in domestic manufacturing, but the impending expiration of a federal tax incentive is threatening the trend, the U.S. Department of Energy says in a report out Tuesday.

Amid election year debate over the wind industry’s 20-year-old federal tax credit, the Energy Department touts the economic benefits of the incentive in a commissioned analysis authored by the Lawrence Berkeley National Laboratory.

About two-thirds of the equipment installed on new U.S. wind farms in 2011 came from domestic manufacturers, according to the report. That compares with an estimated
35 percent in 2006.

Further, in 2004, General Electric was the only manufacturer assembling wind turbine nacelles — the generator housings — at utility scale in the U.S., according to the report. Now eight of the nation’s Top 10 turbine suppliers have at least one manufacturing facility in the U.S.

Several companies across the wind power supply chain, however, have announced scale-backs in U.S. staff and production because of uncertainty surrounding the federal tax incentive.

The wind production
tax credit, which gives a 2.2-cent tax break for every kilowatt-hour of power produced, expires at the end of this year.

Critics of the credit, including Republican presidential candidate Mitt Romney, say the wind industry should be able to stand on its own without the government subsidy.

President Barack Obama continues to support it.

Last year, wind turbines powered nearly a third of the new electricity generation capacity built in the United States, growth driven by government incentives, as well as by declining costs and improving performance of wind power technology, the report noted. And
16 percent of the wind power installed in 2011 worldwide was in the U.S., second only to China.

Texas wind power generation capacity grew by
3 percent to 10,394 megawatts in 2011, allowing the state to maintain its spot as the nation’s biggest wind power producer, by far.