The U.S. wind industry is poised to set a record for new installations this year when it is expected to surpass 10 GW, but construction might fall off the proverbial cliff in 2013 without extension of a federal tax credit. Add in cheap natural gas sucking up most of the new generation capacity or conversions, and industry advocates say one-half of the 75,000 wind jobs in construction and manufacturing are at risk without Congressional action.
In anticipation of the annual American Wind Energy Association (AWEA) conference, Generationhub spoke to Peter Kelley, the organization’s vice president of public affairs, as he arrived at this year’s venue, in Atlanta.
As in most discussions about renewables this year, the pending expiration of the 2.2 cents-per-kW production tax credit (PTC) at year’s end dominates.
“There’s no doubt this is a critical time for the industry. It’s going to be our biggest year ever, while we’re on track to install well over 10 GW, which would top 2009,” he said. “And yet, there are very few orders, so far, for 2013. So, everyone coming to Atlanta is going to ask how are we going to get the PTC extended, and how are we going to get orders for 2013, so we can plan our businesses.”
The conference showcases the Southeast for the first time, with most previous conferences in wind industry installation or manufacturing hotspots like Chicago, Texas or California.
Kelley said AWEA made the decision to go to Atlanta a few years ago to get exposure in a different region, and one in which wind has not been a major generation resource.
The Southeast has in recent years become more of a manufacturing center, Kelley said. Of the 472 manufacturing facilities that supply the wind industry, more than 90 are in the Southeast. Only a handful of wind sites are generating electricity in the region.
The industry wants to highlight the growth of the domestic industry from coast-to-coast, not just the energy potential. AWEA points out that five years ago 25% of the material in turbines was produced in the U.S., while domestic content of turbines now exceeds 60% as U.S.-based manufacturers have been attracted to the sector or foreign companies have opened plants here.
That manufacturing base, which wasn’t as extensive or didn’t exist at all during previous expirations of the PTC, is what the industry is counting on to win Congressional favor this time. Bipartisanship will be on display here, which will be necessary to get the PTC extended, as elected officials for both parties share the podium.
A conference highlight is the joint appearance on June 5 by Republican stalwart Karl Rove, a wind supporter since his days in Texas with former President George W. Bush, along with Robert Gibbs, the former spokesman for President Barack Obama, pushing for the PTC extension and other wind-favoring policies.
Kelley said the PTC proponents are trying to make the extension non-partisan as it is included on a short list of tax extenders that members of both parties want to pass before the August break that ushers in the fall campaign.
Discussions of an extension in the lame-duck session in November were prominent, which comes too late to effect any changes in the manufacturing climate for 2012 and even delays construction decisions until later in 2013.
Industry health going forward will be hard to gauge, in a way, as AWEA meets in unfamiliar territory in the midst of an economic slump.
The show won’t approach the high point it reached in Chicago three years ago, when 23,000 attended with more than 1,100 exhibitors. Companies representing 60 countries will be present among the 900-plus exhibitors, but AWEA won’t venture a guess on attendance until it sees how many walk-ins show up.
Another factor not present three years ago was the recent dominance of natural gas generation. Slumping power demand and low prices influenced by cheap natural gas were circumstances not anticipated a few years ago. Kelley gave wind’s perspective, which mirrors other segments of the power industry.
“No one expects cheap natural gas to be around for more than a few years, while wind is a 20- to 30-year play,” he said.
Utilities even those in the South, are adding wind to their portfolios, along with “early adopters” like Xcel Energy (NYSE: XEL) continuing to add capacity.
“Utilities are interested in a diverse portfolio,” he said. “Nobody wants us to go to all-gas-generation.”
But if the industry moves away from gas in time to keep wind prospering is a different question, no matter what Congress does.