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Wind energy: Boom sputters as industry tax credit is set to expire

Congress has so far not extended the tax credit for wind energy, resulting in the layoffs of thousands of workers. Communities that a few years ago were elated to attract a promising new industry are left wondering what will the future bring.

By Richard MertensCorrespondent / December 28, 2012

The sun rises behind windmills at a wind farm in Palm Springs, California in 2011.

Lucy Nicholson/Reuters

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Chicago

Alex Derr had a new house and a son on the way when he landed a coveted job building massive fiberglass wind-turbine blades at a new factory in Fort Madison, Iowa. With well-paid work in a growing industry, he seemed to have it made.

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“Having a new family, I thought it was great,” says Mr. Derr, who is in his 20s. “I thought I was getting hired for a career.”

But his career in the wind industry came to an abrupt and premature end in October, when the plant where he worked, owned by Siemens Energy, a German company, let go most of its more than 700 workers. Similar layoffs have affected thousands of workers in communities across the United States. The reason: the impending expiration of a federal tax credit for wind energy.

Despite pleas from wind-industry advocates and politicians in important wind-energy states, Congress has so far not extended the tax credit beyond the end of the year. So on the eve of its demise, workers who thought they had snagged a dream job now find themselves once again looking for employment. Communities that a few years ago were elated to attract a promising new industry are left wondering what will the future bring.

“It was a big gut check for us,” says Fort Madison’s mayor, Brad Randolph. “It was like, two steps forward, one step back.”

The federal tax credit has helped to buoy American wind energy since 1992 and, more recently, to spawn a small but growing manufacturing sector. Uncertainty over its future now threatens 37,000 jobs, according to the American Wind Energy Association, a trade group. Some of these are held by the 30,000 workers employed in more than 500 manufacturing facilities, from big plants that assemble large wind-turbine components to smaller suppliers providing gearboxes, bolts, and other parts.

The cuts in the wind industry have concluded a strange year of both glut and dearth for the industry and its workers. With the tax credit scheduled to expire, wind-energy developers have been racing to complete new projects. By the end of this month, in fact, they are set to have installed more than twice the new capacity that had been expected at the start of the year, according to the US Energy Information Administration. Half this new capacity is expected to come on line this month.

For workers, this has meant going from too much work to too little. At the Siemens factory in Fort Madison, employees worked seven days a week for much of the spring and summer, rushing to complete orders. “We worked ridiculous hours,” says Derr, who was working overtime until a week before his job disappeared.

In Colorado, Martha Wyrsch, president of Vestas-American Wind Technology Inc. until recently, described 2012 as the firm’s “busiest year ever,” supplying turbines to more than 20 new wind farms. Still, the parent company, Vestas Wind Systems in Denmark, let go hundreds of workers at four manufacturing plants in Colorado that build and assemble wind turbines.

These layoffs, plus the relocation of some workers, reduced the Vestas workforce from more than 1,700 to about 1,100. Earlier this month, the company also announced it would cut the hours of its remaining workers from 40 to 32 hours a week, beginning next month.

The year’s swings reflect earlier ups and downs in an industry. Over the past two decades, wind energy has grown substantially, thanks in part to technological advances. Total US capacity has risen from less than 1.5 gigawatts in 1992 to 47 gigawatts at the end of 2011. But this rise has been vulnerable to uncertainty over the federal tax credit, which now stands at 2.2 cents per kilowatt-hour produced.

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