Wind power here to stay in Iowa
Industry viable over long term despite tax-credit shifts
With the recent layoff of 40 employees at Acciona Windpower in West Branch and larger furloughs last fall at Siemens Energy, Trinity Towers and other Iowa wind turbine component plants, the long-term viability of the industry has been questioned.
But analysts who follow the electric power industry are quick to affirm the future of wind power as a long-term source of renewable energy.
“Wind is not going anywhere,” said Shane Mullins, vice president of product development for the power industry at research firm Industrial Info Resources in Sugar Land, Texas. “Many wind turbine manufacturers did not receive any orders after June of last year as developers waited to see if Congress would extend the production tax credit before it expired on Dec. 31. With the extension of the PTC on Jan. 3, wind turbine construction projects that were put on hold last year are going to be dusted off.
“Between now and the middle of this year, we believe there are going to be a lot of projects come off hold and be back on active status.”
The PTC, created in 1992, provides a 2.2-cent-per-kilowatt-hour benefit for the first 10 years of a wind turbine’s operation. That has enabled wind to compete with coal, natural gas and nuclear power plants.
Losses and gains
Wind power installations have declined between 73 percent and 93 percent in the years after previous expirations of the PTC.
Congress has restored the tax credit after previous expirations, but not before widespread industry layoffs.
Even with the PTC extended to Dec. 31, 2013, Mullins expects only 3 gigawatts to 4 gigawatts of new wind power likely will enter commercial operation by the end of 2013, compared with about 12 gigawatts that entered service in 2012.
He said many developers and utilities raced to get turbines installed and in service before Dec. 31, which was required to take advantage of the PTC.
“A lot of the projects that came online last year had started construction in 2011,” Mullins said. “Many developers were pulling construction projects out of 2013 to start construction by midyear in 2012.”
Under the latest PTC extension, wind turbine projects need only be physically started by Dec. 31, 2013. Howard Leaner, executive director of the Chicago-based Environmental Law & Policy Center, said that has the potential to extend new wind farm construction.
“With wind turbine efficiency increasing and with wind having the inherent advantage of zero fuel cost, we see active wind turbine development through the end of 2013 and possibly into 2014 or 2015,” Learner said. “Natural gas prices have been low over the last couple of years, and that’s a good thing for our economy, but who knows what natural gas prices will be in two years, five years or 10 years?”
Learner said wind power can provide a long-term hedge against the volatility of other fuel prices. The nuclear power industry, for example, is facing the potential for costly retrofits in the wake of the Fukushima disaster.
“The cost of coal is higher than natural gas right now, and natural gas prices are starting to move up,” Learner said. “Most smart utility managers are adopting a portfolio approach that includes zero-fuel-cost wind power.”
Demand, jobs growing
Mullins said demand for wind energy is going to grow because of increases in state-mandated renewable energy portfolio standards. He expects about 4 gigawatts per year of required utility purchases of renewable energy over the next decade.
“That’s all been met by utilities until you get to the 2015 or 2016 time frame,” Mullins said. “That’s when purchase power agreements are going to start coming out for more wind power.
“Right now, it’s believed this will be the last extension of the PTC for wind. With natural gas prices expected to rise in 2016 and the increased demand for renewable energy kicking in, wind will be able to compete without the need for the PTC.”
At its peak, the wind power industry was responsible for supporting 7,000 jobs in Iowa. Many of those positions were part of a supply chain of more than 50 manufacturers in many large and small communities across the state.
Some wind turbine manufacturers have entered the aftermarket for wind maintenance and repair as a revenue source to get them through a lean period for new turbine orders. David Bennett, energy production and distribution technology instructor at Kirkwood Community College, said the job market is strong for wind energy technicians.
“I have 3,500 job openings posted on my board right now,” Bennett said. “All you have to do is look and be willing to travel. Most of them are not here in Iowa, where there’s only two projects hiring at the present time.
“The first thing that I tell my students is get their passport ready and pack their bags. There are wind energy technician jobs in Australia, Brazil, Canada, Portugal, South America and Spain.”
The average annual salary for a wind turbine technician is generally from $35,000 to $43,000, depending on qualifications and experience, according to the U.S. Bureau of Labor Statistics.
With Iowa getting the largest portion of its electricity from wind than any state, 24 percent, the state could be a net exporter of wind-generated power if the necessary power grid infrastructure existed, said Debi Durham, director of the Iowa Economic Development Authority.
“While there are companies like Clean Line Energy Partners stepping in to address that, it takes time to secure (property) easements and it will require time to build transmission lines,” Durham said. “It’s not going to happen overnight.
“We have the retirement of the old coal-fired coal plants and stuff coming out of Washington about emissions reductions, but the infrastructure is just not there for all these clean and renewable energy alternatives. Until that occurs, we’re not likely to see robust growth for wind or other alternative energy platforms.”
Durham said the federal government, which is issuing the mandates, needs to have a national energy policy.
“We also need to know how this energy infrastructure is going to be built,” Durham said. “We have to look at incentives so the private sector will step in and do some of this from a return on investment.”