Obama Win Raises Odds of Extending Tax Credit for Wind
Congress will likely renew the Production Tax Credit before it expires at the end of the year, said Denise Bode, chief executive officer of the Washington-based industry group.
Obama’s support for renewable energy and the U.S. wind industry is a critical component of the effort to renew the credit that pays 2.2 cents a kilowatt-hour for power produced by wind and other renewable sources, Bode said. The Republican presidential challenger Mitt Romney said he opposes subsidies for renewable energy.
“Swing states with wind farms and factories went overwhelming for Obama and that helps remove uncertainty regarding the extension,” Bode said today in an interview.
Republicans including Iowa representatives Steve King and Tom Latham will help ensure that Congress passes a bill to extend the tax credit, she said.
“There’s strong bipartisan support for wind and we look forward to immediate action,” Bode said. “An immediate one- year extension would restart development and protect jobs”
There are about 75,000 U.S. wind-industry workers, according to AWEA, most in Texas, Iowa and Midwest states that typically vote for Republicans. Letting the credit lapse will lead to the elimination of 37,000 wind-industry jobs, the trade group has estimated.
Renewing the tax credit this year may not avert all job losses or boost turbine sales until the second half of 2013 because of the long lead-time needed to develop wind farms, said Amy Grace, a wind industry analyst at Bloomberg New Energy Finance in New York.
“We’d probably start to see a lot of projects financed in the third and fourth quarter, resulting in a spike of turbine orders in the second half,” Grace said. If the credit gets a 12-month extension, to qualify “projects only need to start construction next year, not reach commercial operation.”
That may reverse declines at manufacturers such as Broadwind Energy Inc. (BWEN), which makes steel towers for turbines, said Alex Morris, an analyst at Raymond James & Associates in Houston.
“The results from yesterday certainly make a PTC extension more likely,” Morris said. “If the PTC is extended, there would probably be upside in the stock.”
Broadwind, based in Naperville, Illinois, has dropped 48 percent in the past year as sales stagnated. Denmark’s Vestas Wind Systems A/S (VWS), the world’s largest maker of turbines, has dropped 68 percent in the past year.
Turbine installations next year in the U.S. are expected to fall as much as 88 percent to as low as 1.5 gigawatts next year if the credit isn’t extended, according to New Energy Finance.
The Global Wind Energy Index (NBGLWDDP) of 69 wind-energy companies has declined 18 percent this year.
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