Maybe you don’t need a weatherman to know which way the wind blows, but the CEO of St. Paul-based WindLogics, a wind forecasting company, can tell you the political breezes are not favorable right now.
Mark Ahlstrom’s company, located in Energy Park, develops sophisticated forecasts for wind developers. The developers need this information at the beginning of a project, which can take up to two years to complete, so the health of Ahlstrom’s company is a leading indicator for the industry.
Ahlstrom said WindLogic has 52 employees, but recently, it reduced its staff by 10 because developers have ceased work on new projects.
The reason for the slowdown? A federal tax credit for the wind industry is due to expire at the end of the year, and, unsure whether Congress will extend the credit, developers have started to shelf new projects.
The uncertainty means tens of thousands of jobs covering everything from engineering to manufacturing to construction could be lost next year, Ahlstrom and others in the wind industry predict.
“I don’t think it would be totally dead, but it will still be a down year no matter what happens,” Ahlstrom said at a news conference supporting the tax credit, held under a wind turbine in North St. Paul Monday, July 2.
“The longer it goes, the worse it gets,” he added.
Unless Congress acts quickly, potentially 37,000 U.S. jobs will be lost next year, including several hundred jobs in Minnesota, a visiting White House official said.
“Delaying action is creating uncertainty. Companies are scrapping or delaying plans to build new turbines,” Nancy Sutley, chairwoman of the White House Council on Environmental Quality, said at the news conference.
The production tax credit was created in 1992 and gives wind farms a credit of 2.2 cents per kilowatt-hour of electricity produced. Since its inception, the tax credit has been extended seven times, but it has lapsed on occasion.
The extensions have created a boom-bust development cycle for the U.S. wind industry. It’s in a boom period now, adding more than one-third of all new generating capacity for the country in the past five years, second only to natural gas.
But the last time the production tax credit expired, installations of new projects dropped by 73 percent over the previous year, Rep. Keith Ellison, D-Minneapolis, said at the news conference.
“If Congress doesn’t act soon, the entire wind energy economy will grind to a halt,” said Rep. Betty McCollum, D-St. Paul.
Minnesota added 542 megawatts of production last year, according to the American Wind Energy Association, but it has more than 20,000 megawatts waiting in the queue to help utilities meet a state mandate for 25 percent of all electricity produced to come from renewable energy sources by 2025.
Minnesota utilities are ahead of schedule for adding wind power and in no rush to support new projects without a tax credit, said Beth Soholt, executive director of Wind on the Wires, a regional advocacy group.
President Barack Obama supports the tax credit, as well as a 30 percent investment tax credit for manufacturers that invest in equipment to make components for U.S. clean energy projects. Opponents say the tax credits are too expensive and indicate the industry can’t support itself.
Standing beneath the spinning blades of the 115-foot tall turbine owned by the Minnesota Municipal Power Association, Sutley said it would fairly simple for Congress to extend the tax credit quickly.
However, Minnesota companies in the wind business already anticipate job losses next year.
Golden Valley-based Mortenson Construction, one of the top wind farm builders in the country, has about 1,100 employees working on projects, said Tim Maag, vice president and general manager of the company’s U.S. wind operations.
If the tax credit expires, several hundred of its presently 800 blue-collar craft jobs will vanish, Maag said.
Ahlstrom said wind developers he talks to are not seeing signs for hope so far.
“They’re just tightening their belts and trying to ride this out,” he said.
Leslie Brooks Suzukamo can be reached at 651-228-5475. Follow him at twitter.com/suzukamo.
