By Ana Radelat, Capitol News Connection
WASHINGTON — Iowa’s wind energy industry has big plans, but needs Washington to help carry them out.
About 20 percent of the electricity produced in Iowa is created by the wind. That’s the highest percentage in the United States. The industry says it has created 2,300 manufacturing jobs in Iowa and has set a goal for dramatic expansion.
But the fate of the industry depends on a series of subsidies — especially a production tax credit that’s worth from $4 billion to $5 billion to wind energy companies each year. An increasingly brutal budget battle, however, may make it tough to protect those subsidies.
Like many sectors of the economy, the wind industry has been hard hit by the recession — and by the credit drought that resulted from Wall Street’s collapse. After a decade of growth, the industry’s momentum seemed to slow.
“The credit market hit the skids for a lot of things, including the development of large-scale wind farms,” said Harold Prior, executive director of the Iowa Wind Energy Association.
There were no new wind farms established in the state last year. But MidAmerican Energy Co. and Siemens have reached a deal for the construction of 258 wind turbines in western and central Iowa. Other proposals are in early planning stages.
While much of the wind power generated in Iowa comes from the central and western portions of the state, the industry has a far reach. Cedar Rapids companies like Clipper Wind, which manufactures turbines, and Van Meter Industrial, which makes electrical controls, depend on growing wind power.
Wind farms and their suppliers are looking to Congress, where Republicans and Democrats are fighting over how much to cut from the federal budget before raising the national debt ceiling again.
“I don’t think anything is off the table,” said Aaron Severns, a lobbyist with the American Wind Energy Association. “But the production tax credit has always had bipartisan support.”
Iowa Sen. Chuck Grassley, a Republican, sponsored that tax credit, which was enacted in 1992.
“I pushed this incentive to give wind energy the ability to compete against coal-fired and nuclear energy,” Grassley said in an April speech. “The industry … used the tax incentive to grow wind energy from almost non-existent to the success story of today.”
Liz Salerno, chief analyst at the American Wind Energy Association, said Grassley’s tax credit “has been the main driver for the industry.”
But the tax credit will expire at the end of 2012.
“The strategy now is to get it extended as soon as possible for as long as possible,” Salerno said.
While Grassley and other Republicans from states with developed wind energy industries support the tax break, other GOP lawmakers say renewable energy subsidies are a waste of taxpayer money.
When Congress heatedly debated the future of oil company subsidies last month, Sen. Lamar Alexander, R-Tenn., said the focus of budget cutters should be on the wind industry, which he says gets much more taxpayer money.
He cited a 2007 Energy Information Administration report that determined wind energy received $18.82 in federal subsidies per megawatt hour — 25 times as much as all other forms of electricity combined.
“Specifically, if we are talking about ‘Big Oil,’ why don’t we talk about ‘Big Wind?’” Alexander asked. “The Senate seems an appropriate place to talk about ‘Big Wind.’”
Alexander argued the tax credit was only meant to last two years but has lasted two decades.
But that credit helped companies like MidAmerican Energy set up turbines all over Iowa.
“The company used the production tax credit for our new wind projects, which are being erected this year,” MidAmerican spokeswoman Tina Potthoff said. “The tax credit helps make our wind projects economical for our customers.”
The federal government also helps the industry with other tax breaks and a loan guarantee program that was established by the stimulus bill and will expire in September.
The Iowa Wind Energy Association’s Prior said federal subsidies should be renewed and extended permanently to protect jobs and help grow the industry, especially through an expansion of the grid that delivers energy from Iowa wind farms to the market.
“If we’re going to be serious about renewable energy, we need more federal funding for wind,” he said.