A Washington Times article purported to correct President Obama's statement that an Arkansas wind turbine factory was put on hold because Congress delayed extending key wind energy tax credits. The article asserted that the real cause was "a patent dispute" with General Electric. But Mitsubishi, the company building the plant, has specifically said that it would begin operations if the Production Tax Credit were extended.
While the patent dispute may have been one factor in Mitsubishi's decision, Mitsubishi cited weak demand for wind turbines in its statement on why it is not going to begin operations at its recently completed Arkansas factory. As the business journal SNL Electric Utility Report noted in its report on Mitsubishi's decision, a large reason for that currently weak demand is uncertainty over whether the PTC will be extended:
One contributor to the tepid market for new wind turbines in the United States has been that Congress has so far declined to extend the production tax credit for wind energy beyond the end of this year. If the credit is allowed to expire, the wind market is expected to drop sharply. [SNL Electric Utility Report, 4/9/12, via Nexis]
"We need a market to operate our factory. Right now, the market is not so good. We have a site but cannot operate it," says Yoshinori Ueda, assistant general manager of MHI's [Mitsubishi Heavy Industries] wind turbine business. "If we have the PTC, we will go ahead."
Meanwhile, Mitsubishi plans to "expand its onshore wind turbine business in Japan, where demand is expected to grow as a result of the government's 'feed-in tariff' policy to promote renewable energy, as well as in overseas markets."
Uncertainty over whether the PTC will be renewed is already affecting the industry, and according to the Washington Post "administration officials and industry experts" say that without the PTC, "as many as 37,000 jobs could be lost."
While the oil and gas industry has enjoyed permanent tax breaks for decades, Congress has let this crucially important wind energy tax credit expire several times, causing a collapse in wind installations:
A recent report by scholars at the Breakthrough Institute, the Brookings Institution and the World Resources Institute noted that new wind power projects are presently competitive with new gas-fired generation, but warned that "the PTC is scheduled to expire at the end of 2012, creating significant market uncertainty and prompting manufacturers of wind turbine components to prepare for layoffs." The report recommended several reforms to correct the "intermittent and haphazard nature of US energy policy."