Danish wind turbine maker Vestas remains optimistic that US lawmakers will extend a key tax credit for renewable energy investment, despite the failure of a proposal in the Senate, recently. A Senate proposal attached to a transport bill to extend tax breaks for wind, solar and advanced biofuels fell when votes were tied at 49 for and against.
Vestas, the world's biggest wind turbine manufacturer, has repeatedly warned that failure to extend the Production Tax Credit (PTC), due to expire at the end of this year, could lead to a collapse of the US wind turbine market and force it to cut 1,600 US jobs.
Vestas Senior Vice President and Head of Government Relations Peter Brun told Reuters on Wednesday he expected Congress to extend the PTC, though possibly not until after the presidential and Congressional elections in November. "Our realistic expectation is that there will be an open window after the presidential election and towards the end of the year, when many important issues are often passed," Brun told Reuters in a telephone interview.
"We believe and hope that logic and reason will prevail in this debate," he said. "Up till the election, everything will be political," he said, noting it was normal to delay decisions on such proposals until the political backing is secured. Brun said the PTC had traditionally had bipartisan support - broadly within the Republican camp and from the Democrats. "It has earlier been used as a driver for various package deals involving more controversial issues." Introduced in 1992, the PTC provides a tax credit of 2.2 cents per kilowatt-hour of electricity produced.
The last time politicians abolished PTC in 2002 led to a 75 percent collapse in the US wind turbine market from one year to the next, according to the American Wind Energy Association. In recent information to shareholders ahead of its annual general meeting on March 29, Vestas cited IHS Emerging Energy Research (EER) as saying there was a risk of the US market dropping from about 11 gigawatts in 2012 to just over 2 gigawatts in 2013 if the PTC is abolished.
"Such an 80 percent decline would be even worse than what we witnessed a decade ago," Vestas said. Brun said the United States had invested too much in renewable energy in recent years to put that investment at risk by not extending the PTC. He noted that jobs had been created in the United States because of the scheme, with the big manufacturers setting up production there, and the industry had made money. In January, when Vestas announced plans to cut 2,335 jobs, the company said it could be forced to cut another 1,600 jobs at its US units if the PTC were not extended.
The company has said it will decide later this year if it will reduce its US workforce, which is mainly located at three factories in Colorado. Brun said job reductions could come before the future of the PTC is clarified as lead times for turbines orders meant that decisions would need to be made this year. Brun said he was not surprised by the failure to secure a majority in the Senate.
"We see this proposal and other initiatives at the moment as something that can be called political positioning," Brun said. "Certain members of Congress want to clearly mark where they stand on this issue. Therefore, and because we are in an election year, we see more of this kind of thing than one otherwise would have seen."
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