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Friday, November 9, 2012

Another One Bites the Dust -- Vestas Wind, Portland, OR

Updates

November 10, 2012: someone asked about the 2.2 cent tax credit. This was my non-expert answer:
I know nothing about the particulars but according to wiki, it looks like there are two incentives:

The Production Tax Credit (PTC) which will expire at the end of 2012. It is a 2.2 cent tax credit that is in effect as long as the law says. The first PCT was enacted in 1992 and expired in 1999; re-enacted in 2002, 2004, 2005, and 2009. [History suggests it will be re-enacted, doesn't it?]

The Renewable Energy Production Incentive (REPI), also enacted in 1992, is in effect until 2016. In 2016 it will expire. It is adjusted for inflation and currently pays to the producer a direct payment of 2.2 cents per KWH for the first ten years of operation.

http://en.wikipedia.org/wiki/United_States_Wind_Energy_Policy


Again, if the math worked out for wind -- that wind energy actually "worked" -- these would be worthwhile incentives. But since there is no redeeming purpose for wind turbines (in my mind), the incentives make no sense. Note: a small diesel generator on a trailer parked in the corner of a commercial garage will power a hospital under emergency conditions; to provide that same amount of electricity would require wind farms the size of 100 football fields would be required. One hundred football fields; and that's assuming the wind is blowing and the transmission lines are still up. One trailer-mounted diesel generator = 100 football fields of wind turbines. (Reputable source: posted earlier but not verified.) [No redeeming feature: a) not economical -- by a long shot; b) not dependable; c) actually decreases the efficiency of conventional-fired power plants because they need to power up/power down depending on wind; d) well known killer of migratory birds, including endangered species, and insect-eating bats; e) no dual use on wind farm acreage. And, of course, on top of all this, a "solution" for a problem that does not exist, or at least a problem that won't be solved with wind farms that will account for less than one percent of total global energy demand going forward. The math simply does not work.]
Original Post
Link to earthfix.opb.
A global wind company with offices in the Pacific Northwest has announced more layoffs.
Vestas says it will cut an additional 3,000 jobs by the end of 2013. That nearly doubles the number of jobs the wind turbine company had planned to eliminate. Most recently Vestas it would layoff 3,700 people by the end of 2012.
Vestas has not said where jobs will be cut from its global workforce, though some of the job eliminations happen as the company sells off some manufacturing facilities. That means workers will be employed through a different company. Vestas’ North American sales and service office is based in Portland.*
It's all part of the fiscal cliff.
One major reason for the slowdown is industry uncertainty over the production tax credit. Right now, wind producers receive a 2.2-cent tax credit for each kilowatt hour of energy the produce. That credit is set to expire Dec. 31.
The American Wind Energy Association, an industry trade group, predicts 37,000 jobs will be lost, if the credit is not extended another year.
*The faux environmentalists in Portland, OR, want to close their ports to exporting coal. More job losses. Economic suicide. 

What I find amazing is the tax credit is (what seems to be) a paltry 2.2-cent tax credit for each kilowatt hour of energy produced. Isn't coal, natural gas, nuclear between eight cents and fourteen cents/kilowatt hour retail?

4 comments:

  1. Bruce to give you a idea of the Dollar amount of tax credit given to any one company, Montana Dakota Utility ( MDU ) which is in the heart of the Bakken has 2 wind facilities.
    The 20 Unit Diamond willow , South of Baker ,Mt. and the 13 unit Cedar Hills wind farm west of Rhame,Nd.
    The 2011 MDU annual Report on page 7 shows the Diamond willow in 2011 generated 98,867,000 KW.
    The Cedar hills wind farm generated 59,468,000 KW. The total of 158,335,000 KW generated gave MDU a $ 3,483,370 tax credit at the .022 cents per KW..

    ReplyDelete
    Replies
    1. I guess I was thinking of the other side of the coin: how little it cost consumers to entice companies to put up wind farms. It almost appears CPAs and the CFO need to know calculus to figure out if tax incentives are worth it. Once they max out the tax credits, they can sell the asset.

      Delete
  2. Hi Bruce,

    I currently have an electrical engineer friend working in Texas on several short jobs. The company he is consulting for are trying to get a wind farm completed by year-end to qualify for the tax incentive.
    The possibility that it may not be completed has brought forth a looming $30 million lawsuit if the project is not finished on time. That gives a little perspective on the importance placed on qualifying for the incentive. The thing I am unsure of is how long this 2.2 cent incentive is paid. Could that be for the life of the field? Wow! Big incentive!
    Tom Scott
    Billings, MT

    ReplyDelete
    Replies
    1. I know nothing about the particulars but according to wiki, it looks like there are two incentives:

      The Production Tax Credit (PTC) which will expire at the end of 2012. It is a 2.2 cent tax credit that is in effect as long as the law says. The first PCT was enacted in 1992 and expired in 1999; re-enacted in 2002, 2004, 2005, and 2009. [History suggests it will be re-enacted, doesn't it?]

      The Renewable Energy Production Incentive, also enacted in 1992, is in effect until 2016. In 2016 it will expire. It is adjusted for inflation and currently pays to the producer a direct payment of 2.2 cents per KWH for the first ten years of operation.

      http://en.wikipedia.org/wiki/United_States_Wind_Energy_Policy

      Delete

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