By Travis Perry │ Kansas Watchdog
OSAWATOMIE — The fate of a green energy tax credit could put the brakes on an accelerating expansion of renewable energy across the U.S. as developers try to avoid plunging off the fiscal cliff.
In question is the future of the Renewable Energy Production tax credit, which provides more than 2 cents per kilowatt-hour to producers who generate electricity from wind, biomass or other renewable sources.
The credit is designed to help cover the cost of plugging into the nation’s coal and natural gas-powered electric grid, and it will expire at the end of this year without another extension from Congress.
Melanie Forbrick, spokeswoman for Siemens Wind Energy, said so far this year the industry has seen an 11 gigawatt expansion nationwide, almost double from the 5-6 gigawatts in previous years. The sudden increase, Forbrick said, is tied to concerns about whether the tax credit would be extended.
If Kansas Republican Rep. Tim Huelskamp has anything to say about it, that won’t happen.
“Frankly I think it’s time for wind to compete, and in some places they do,” Huelskamp said. “I’m not opposed to wind or solar, I’m just opposed to taxpayers paying for things that may not make common sense.”
After two decades, Huelskamp says, it’s time to bring an end to the green tax credit, which, he thinks, has done plenty to prop up the renewable energy industry nationwide. It’s time for the green energy industry to stand on its own, he noted.
“The subsidy for wind is 88 times more (per megawatt hour) than any subsidy for traditional fossil fuels,” Huelskamp said. “If you can’t compete without a handout from Washington, you’ve got to wonder why you’re in that business.”
But Kansas wind energy manufacturers and developers say pulling the rug out from under the industry could chill future expansion.
Frank Costanza, executive vice president of Lenexa-based Tradewind Energy LLC, said indecision surrounding a possible extension to the tax credit has already affected his business.
“Washington has been on hold for the last year on every industrial front. It really has had a significant impact on our decisions,” said Costanza, who added that his business has enacted a hiring freeze until the situation surrounding the tax credit becomes clear.
In September, Siemens announced it would be laying off nearly 150 workers at its new Hutchinson manufacturing plant, and more than 640 others in Iowa and Florida. Forbrick said while tumbling natural gas prices played a role in the decision — aimed at helping the company stay competitive — the future of the tax credit certainly played a part.
Both Forbrick and Costanza hope a one-year extension will be passed in Congress after the election, which, they say, would give the industry time wean itself from the subsidy.
“When you build an industry around a concept … we all become accustomed to using that, and it becomes more or less ingrained,” Costanza said. “Now that we’re looking at the end of this, nobody has had time to prepare.”
Huelskamp said that’s anything but the case.
“The law has been in effect for five years, and they’ve had five years to figure it out,” Huelskamp said, referring to the tax credit’s most recent extension.
“Kansas understands the positive impact that wind energy can make,” Brownback told the convention.
“More than 1,200 new, high-paying manufacturing jobs have been announced in Kansas in the last two years directly related to renewable energy,” he said. “Kansas also has more wind-energy construction projects under way than any other state … and nearly $3 billion of new investment from 2011 to the end of 2012.”
Forbrick said Siemens has no plans for future layoffs if the tax credit is not renewed.