When the Hoosac wind project’s 19 turbines start generating wind power by year’s end in northwestern Massachusetts, the benefits will go well beyond pollution-free electricity.
American workers fabricated the turbines and blades and installed the towers, and American workers will operate them. The hill towns of Monroe and Florida will be bolstered by annual tax payments equivalent to more than 10% of their annual operating budgets. And the equivalent of nearly 10,000 homes will be powered by electricity that isn’t saddled by the health or safety risks of coal and nuclear energy.
This story is being replicated across the country as homegrown wind power has doubled over the past four years, to 50 gigawatts, sufficient to power 13 million homes and retire 44 coal power plants. Particularly exciting is the fact that since 2005, the percentage of U.S.-manufactured components in these wind installations has jumped from 25% to 60%, keeping more than 400 factories in 43 states humming.
A key driver of this phenomenal growth has been a low-profile federal policy called the wind production tax credit.
This tax incentive, which helps wind compete with coal and natural gas power plants, is critical for financing new projects. Regrettably, it is scheduled to expire at the end of this year and has become a partisan football, prompting Congress to slow-walk its renewal.
Ending this policy could recklessly stall an industry that has grown at an impressive clip through the Great Recession. Other factors share the credit for this explosive growth, including improved turbine design and mandates like the one here in Massachusetts requiring utilities to ramp up their reliance on renewables. But wind power developers will tell you that the production tax credit is essential for signing power purchase agreements with utilities and securing financing.
The consequences of killing the wind tax credit are dire. A December 2011 study by Navigant Consulting estimated that investment in wind projects would drop 65%, from $15.6 billion in 2012 to $5.5 billion in 2013, and the industry would have to lay off nearly half of its workforce – about 37,000 people – next year. Here in New England, plans to install nearly 2,800 megawatts of wind power would be jeopardized.
Fortunately last month the Senate Finance Committee voted by a 19 to 5 bipartisan tally to extend the tax credit for one year, which has the support of the National Association of Manufacturers and the U.S. Chamber of Commerce. Congress should finish the job this fall and send an extension to the president to ensure that wind projects and the tens of thousands of jobs dependent on them go forward into next year.
For information or assistance with a wind production tax credit or other renewable energy tax credits, contact The Cherrytree Group.