Wind Supporters Link Subsidies to Survival of Arkansas' Wind Energy Sector

by Luke Jones  on Monday, Jul. 15, 2013 12:00 am  

Windmills like this one near Newport aren’t common in Arkansas, but making the components was expected to be big business here. (Photo by Mark Friedman)

With the announced closure of Nordex USA’s wind turbine plant in Jonesboro, it’s starting to look like Arkansas’ wind energy industry didn’t survive the election.

But proponents say there’s still hope both in the state and the nation — provided that subsidies stay in place.

Historically, wind has depended on the Production Tax Credit, which allows companies producing renewable energy to pay a lower income tax rate by 2.2 cents per kilowatt-hour. The policy expires every one to three years.

The credit has traditionally had bipartisan support, but that didn’t stop it from last year being mired in Congress’ agonizing fight to agree on a federal budget.

On Jan. 1, the budget debate finally resulted in the credit being renewed, but only for one more year.

“I support the extension and I’m glad it went through, but I just couldn’t vote for the [budget bill],” U.S. Rep. Tim Griffin, R-Ark, said in January. “I don’t support it permanently, but the federal government has intervened in the market and given credit over the years, and to take it away all at once and not give time to adjust is not the right thing to do.”

When Nordex announced its closure, the company cited uncertainty in the tax credit situation as one of its reasons. The amount of money the industry saves on the credit isn’t clear, but according to the American Wind Energy Association, that uncertainty before Jan. 1 resulted in a 100 percent drop in installation projects between 2012 and 2013. That’s a big problem when it can take up to two years to plan and build a wind farm.

“That’s not a way to run a business or an industry,” said Peter Kelley, vice president of public affairs at AWEA, which is concerned mainly with creating a predictable business environment for the wind industry. “As it has been, the main request of Congress is to do something to avoid the boom-bust cycle. But long term, the industry is going to be a vital sector of the electric power industry and the overall energy industry, as it already is.”

Behavior from legislators like Griffin prompted Gov. Mike Beebe to blame the Nordex closure and other issues in the wind industry almost entirely on Congress.

“The governor has a good point,” said Grant Tennille, executive director of the Arkansas Economic Development Commission, which has pushed millions of dollars of incentives into attracting wind companies into the state.

More: Grant Tennille says the wind industry in Arkansas is far from blowing away.

Congress “essentially failed to follow through on that promise in a timely way,” Tennille said. “There is recognition within the industry and within the larger policy-making community that, for some period of time, there will need to be a subsidy for wind to be able to compete.”

 

 

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