Expiration of tax credit looms for Newton wind energy manufacturers

An extension of the Wind Production Tax Credit (PTC), a federal incentive allowing for the wind energy industry to remain competitive with traditional forms of energy production, has been left out of a payroll tax cut extension currently making its way through the U.S. House of Representatives.

An earlier version of the highly contentious payroll tax cut and unemployment insurance bill contained the PTC extension, but North American Windpower and other organizations associated with the wind industry reported Wednesday afternoon that a final compromise between congressional democrats and republicans excluded the renewable energy funding — a move that has some in the industry worried.

Mark Parriott, director and general manager of TPI Composites in Newton, has been logging some extra phone minutes in the last 24 hours to area code 202. The local arm of the U.S. wind blade manufacturer is lobbying to persuade Washington lawmakers to pass an extension of the PTC.

“We continue to be concerned as a company and as an industry about the negative effect of an expiring PTC on activity in our industry,” Parriott said in an interview at his Newton office Wednesday.

The PTC has been allowed to expire three times since it was originally enacted in 1992 and currently is set to expire at the end of 2012. The Newton TPI director recalled an industry-wide slow down in production during past gaps in funding.

“There’s a significant reduction in manufacturing activity that occurs during that time period when it expires,” he said. “I’m not running scared of it, but I’d rather do what we need to do and call our elected representatives in Washington to do the right thing and do what’s right for job growth in America.”

A 2.2 cent per kilowatt hour credit is currently provided by the legislation to companies who purchase equipment produced by companies such as TPI and General Electric. Industry leaders fear that in a non-PTC world the industry would see a significant drop in jobs.

In a recent interview with E&E TV, TPI CEO Steve Lockard cited a recent Navigant Business Consulting study that shows a potential loss of roughly 37,000 of the 75,000 American wind energy jobs if the PTC is not extended.

But Parriott said because of state level energy standards that help generate business it would be difficult to gauge the effect on a local level.

“At a macro level that number makes sense,” he said. “So I will defer to my CEO on that.”

The tax credit renewal has a growing level of bipartisan support in congress, and the Iowa delegation in both the House and Senate as well as Gov. Terry Branstad support the PTC extension.

“We’ve got a politically diverse representation in Washington, which tells me that this does not need to be a political issue,” Parriott said. “When you can get a Grassley and a Harkin, a Latham and a Loebsack to agree on something, there’s got to be something there.”

Parriott also has been working with Branstad who is currently urging other wind energy producing states to put pressure on Washington legislators.

A retrofit of TPI's Newton facility currently under way could help the local facility if congress does not extend the
tax credit.

When complete, the plant will produce a next-generation blade that is lighter and more efficient. It will power a turbine produced by TPI’s sole confidential customer which, according to Parriott, will make wind energy production competitive and on par with natural gas.

During the construction process, the Newton facility has furloughed over 200 workers, but Parriott said that they are on schedule to hire the part-time employees back by their March/April time line, and for now the looming expiration of the PTC doesn’t seem to be affecting employment levels in Newton.

“There is a concern about 2013, but 2012 his going to be a good year for the wind industry.”

Mike Mendenhall can be contacted at 792-3121 ext. 422 or via e-mail at mmendenhall@newtondailynews.com..