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'Unknowns' buffet wind industry

COLUMBUS, Neb. - For now, the plant is busy: cranes maneuvering massive pieces of steel, sparks flying off welders' torches, trucks pulling up to pick up one of the towers lined up outside.

Wind tower manufacturer Katana Summit has so many orders that it's looking to add 80 more people to its 200-person workforce in Columbus. The company is recruiting welders from as far away as Mississippi and Virginia and is running shifts around the clock to keep the towers going out the door.

But within months, it all could grind to a halt.

A federal tax credit for electricity produced from large-scale wind turbines is set to expire at the end of this year. While several lawmakers have said they want to see the credit continue, it hasn't gained enough votes for an extension. Some lawmakers say the industry has had enough help, while others argue that its growing role in manufacturing and clean energy production merits more assistance.

As a result, wind developers are scrambling to get projects ready before the credit expires but putting the brakes on any future development - leaving companies like Katana in a tough spot. With few or no new orders coming in for the later half of the year, some of the... more [truncated due to possible copyright]  

COLUMBUS, Neb. - For now, the plant is busy: cranes maneuvering massive pieces of steel, sparks flying off welders' torches, trucks pulling up to pick up one of the towers lined up outside.

Wind tower manufacturer Katana Summit has so many orders that it's looking to add 80 more people to its 200-person workforce in Columbus. The company is recruiting welders from as far away as Mississippi and Virginia and is running shifts around the clock to keep the towers going out the door.

But within months, it all could grind to a halt.

A federal tax credit for electricity produced from large-scale wind turbines is set to expire at the end of this year. While several lawmakers have said they want to see the credit continue, it hasn't gained enough votes for an extension. Some lawmakers say the industry has had enough help, while others argue that its growing role in manufacturing and clean energy production merits more assistance.

As a result, wind developers are scrambling to get projects ready before the credit expires but putting the brakes on any future development - leaving companies like Katana in a tough spot. With few or no new orders coming in for the later half of the year, some of the approximately 470 wind-related manufacturing companies in the U.S. have already begun making layoffs.

And if the credit isn't renewed and the orders don't start coming in, the industry says it stands to lose half of its approximately 75,000 jobs.

"It's a big deal," said Kevin Strudthoff, Katana Summit's president and CEO. "And frankly, it's a big deal now."

The Production Tax Credit gives private wind project developers an income tax credit of 2.2 cents per kilowatt-hour of electricity produced by wind turbines for the first 10 years they're running. That can add up, especially for big projects.

First offered in 1992, the credit -which was authored by Sen. Chuck Grassley, R-Iowa -was aimed at helping the then-young wind industry compete against other energy sources. It has expired - and been renewed -a handful of times before.

Every cycle has come with a big drop in the amount of new projects going online -new wind capacity dropped by 93 percent in 2000, by 73 percent two years later, and by 77 percent in 2004, the last time the benefit went away, according to the American Wind Energy Association.

Every time, though, the projects have come back.

But this time, industry leaders say the stakes are higher.

The number of operating utility-scale turbines - and the amount of energy they can produce - has surged since the last time the credit expired. At the end of 2004, the wind power capacity in the U.S. was 8,997 megawatts. Today, that number is 46,916 megawatts.

And increasingly, that power is being generated by American-made towers, blades, and other components.

In 2005, about 25 percent of the parts that go into wind projects were made in the U.S. By last year, the association said, that number had increased to 60 percent. About 30,000 of the 75,000 wind-related jobs in the U.S. are now in manufacturing.

Wind has become particularly important in Iowa, which ranks second in the country in the power capacity of installed wind projects (4,322 megawatts) and first in the number of wind-related jobs (more than 6,000, including more than 3,200 manufacturing positions).

It's also a growing industry in Nebraska, but to a significantly lesser degree. While the state has the fourth-largest wind resource in the U.S., its current capacity is just 337 megawatts. It ranks 25th in wind power production capacity.

Advocates for wind power say part of the reason for that gap has to do with the public power system in Nebraska, which has made it difficult for wind developers to build. A law passed two years ago helped, but Nebraska didn't see dramatic gains because neighboring states began offering tax incentives to keep wind projects coming their way. Nebraska also has a sales tax on turbines, unlike Iowa, Kansas and other states.

At least three new projects, however, are in the works, poised to add a combined 195 megawatts in Nebraska.

David Rich, sustainable energy manager for the Nebraska Public Power District, which has been involved in several large-scale wind projects in the state, said the credit has been a huge driver for the developers that have worked with the utility to build new wind farms.

Rich said he believes the federal credit played "a huge role" in the prices paid for the wind projects NPPD and the Omaha Public Power District are involved in. "It's questionable that either of us would have hardly installed any wind without" the tax credit, he said.

The utilities don't get a direct benefit from the credit, but Rich said they "get at least about 95 percent of the pass-through benefit."

In many cases, wind-related companies have become significant employers in small communities, bringing in workers from around the country.

Rob Hach, president of an Alta, Iowa, company called Anemometry Specialists, said he worries about what will happen to his employees if new wind projects stall out.

His 29 employees do feasibility studies for firms and groups that want to put in wind projects across the country and around the world. It's been a good business. Over the last four years alone, it's quadrupled in size.

But now, Hach says, he's seeing somewhere between a 25 percent and 50 percent drop in demand for his company's work. He laid off four people in February and is scrambling to figure out how to avoid more cuts. He has employees installing wind turbines and solar panels, and he half-joked that he's willing to paint barns if he has to.

"Where we're located, we have 1,800 people in our community, and not a lot of jobs," he said. "We're talking, either be a truck driver or work at the meatpacking plant.

"Working in the wind industry, we're surrounded by hundreds of wind turbines, so (Anemometry employees) can't go back into the countryside and find jobs very easily."

Harold Prior, executive director of the Iowa Wind Energy Association, said he's hearing about other Iowa layoffs, including from the California-based turbine manufacturer Clipper Windpower. The company recently laid off more than 100 employees, most of them in a Cedar Rapids manufacturing facility.

"A lot of things have changed since the last time we faced this," he said. "There are a lot of unknowns about the impact."

One thing seems certain, though: Investors and development companies seem to see the credit as a crucial incentive.

Des Moines-based MidAmerican Energy - a subsidiary of Omaha-based Berkshire Hathaway Inc. and one of the country's largest operators of wind turbines - is adding more than 407 megawatts worth of power in Iowa this year, said spokeswoman Tina Potthoff.

MidAmerican doesn't have plans for more projects beyond this year, but Potthoff said that's because the company doesn't have approval from state regulators for additional development.

"While the end of the tax credit will not impact MidAmerican Energy's workforce, it could very well impact our suppliers and contractors," she said.

Leaders of wind-related companies and industry groups say they're cautiously optimistic that the credit will be renewed, but say the uncertainty in the industry has become frustrating.

"I've been on the line with senators and representatives, and it seems like the support is there, but right now we're dealing with a Washington that's so politically gridlocked," Strudthoff said.

There are bills in both the Senate and the House, primarily supported by Democrats with a few exceptions. Several Iowa Republicans are in favor of an extension.

Jon Goldstein, a spokesman for the American Wind Energy Association, said he believes a stand-alone bill on the credit wouldn't have any trouble passing in Congress. But it's been tacked on along with other proposed credit extensions for other renewable energy industries and with proposals to repeal tax breaks for oil companies, so it's difficult to find common ground.

"Unfortunately, the (legislative) vehicles that have come up so far (for the credit) in the past few months have all been these 'kitchen sink' kinds of attempts," he said.

Robert Byrnes, president of the Nebraska Renewable Energy Association and the owner of a consulting and development company called Nebraska Renewable Energy Systems, said the bigger problem isn't getting the credit extended once again. It's the uncertainty on a regular basis.

"We do our best with it, but it's frustrating," he said. "It's like watching a tennis match, with the back and forth. And nobody really does anything."

Prior said a future when investors don't need credits to build is on the horizon - but the industry isn't quite ready to go it alone.

"We may be close to having turbines so big and efficient that we don't need the production tax credit," Prior said. "But those are not the turbines going in the ground now."

At Katana Summit, the company is on a high point. From a lull in business in 2009, when the plant produced just 30 towers, it's now churning out four or five towers a week, with plans to get to six if enough workers are hired.

Strudthoff is still working to recruit the workers he needs to Columbus.

That process can be a challenge in Columbus, where unemployment is low and there are several other large manufacturing firms looking to snag their own skilled workers. With the added uncertainty of his future staffing needs, it's an even tougher prospect.

Strudthoff hopes he'll have enough work to give the workers reason to come and to stay.

"They are willing to move to Nebraska, excited about having employment," he said. "This is an industry that could definitely support jobs for a very long time."


Source: http://www.omaha.com/articl...

APR 22 2012
http://www.windaction.org/posts/33674-unknowns-buffet-wind-industry
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