In what amounts to an indirect answer to Chris DeArmond’s question a few months back, it appears that the US wind industry will struggle to survive the looming end of the Production Tax Credit (PTC) for wind energy, which was initiated in 1992. Chris’s article “Can U.S. Wind Energy Survive without Government Backing?” hinted at the possibility of drastic cuts due to the anticipated expiration of the PTC. Given the stalemate in Washington, Congress seems entirely unlikely to extend the credit.
Vestas Wind Systems, a Danish manufacturer of wind turbines and parts, with a large base in Colorado, laid off a 30 percent of its workforce in the state. From the company’s media section comes the following evidence of the PTC’s role in the layoffs:
The uncertainty with the Production Tax Credit has led to a reduction in turbine orders for 2013 in the U.S market. This week, Vestas reduced its manufacturing workforce at two Colorado blade factories.
Overall in 2012, Vestas’ manufacturing workforce at its four Colorado factories has decreased from more than 1,700 to about 1,200 people.
According to the Denver Business Journal (DBJ), Vestas opened a blades plant four years ago in Colorado, followed by a towers plant in Pueblo (south of Colorado Spring) and two plants, making wind turbine blades and nacelles, in Brighton (northeast of Denver). Layoffs have taken place in numerous rounds, with “about 80 workers at its blade factory in Brighton” last week, 30 from the nacelles production line in Brighton on August 20th and approximately 100 from the Pueblo location the preceding week.
As further indication that the PTC is at least partially at fault, the DBJ goes on to say that “Vestas officials — as well as [Colorado Senators] Udall and Bennet — have blamed the U.S. market slowdown — and its layoffs in Colorado — on the pending expiration of a federal wind Production Tax Credit (PTC) on Dec. 31. It pays wind farm operators about $22 for every megawatt of electricity generated.”