12/28/2012 05:51 pm ET Updated Jan 08, 2013

Boom Turns To Bust With Wind Industry Tax Credit Set To Expire

Wind developers around the country are racing to get their wind farms tested and running before the federal wind production tax credit expires Tuesday, a shot to the industry that will leave the nation's wind farm construction projects at a standstill.

For Eddy Huffman, who's worked assembling wind turbine controls at a General Electrics plant in Salem, Va., for more than a decade, it's deja vu.

"Every time the tax credit expires, some of us have layoffs," said Huffman, 62, who lives with his wife in Roanoke County. "We don't have layoffs here locally this time, but that's just our plant."

Congress has failed to extend the so-called production tax credit beyond the end of the year, and the stakes for developers are clear. Wind turbines in service before Jan. 1 are entitled to a 2.2 cent tax credit per kilowatt-hour generated in their first 10 years, a perk that saves an estimated $1 million for a big turbine. Unless the subsidy is renewed in last minute fiscal cliff negotiations, those turbines that connect to the grid after midnight on New Year's Eve won't qualify for the subsidy.

Iberdrola Renewables is up against the deadline, opening a wind farm with 126 turbines near Rosamond, Calif., last week, and hustling to make sure that two more -- a 19-turbine farm straddling Monroe and Florida, Mass., and a 24-turbine farm in Groton, N.H. -- are in operation in time to meet the end-of-the-year deadline, as reported by The New York Times.

But Iberdrola spokesman Paul Copleman told HuffPost there "isn't some crazy rush," adding that the perennial threat of the industry's expiring tax credit hardly took the company by surprise.

"The roads have been narrowed, the construction equipment is gone," he said. "The types of activities that we're engaged in at this point in time are the testing of the machines themselves and testing of the interconnection and the regional connecting grid, to make sure that everything is operating the way we expect it to."

The production tax credit, which has expired three times since it was first introduced in 1992, will put an estimated 37,000 workers out of work, according to a study commissioned by the industry.

Huffman, who's already been laid off and rehired several times, said he's seen it all before.

"I've seen layoffs, I've seen early buyouts, people retiring early," he said. More often, he added, people take a month or several months of "volunteer" leave, as Huffman did when the tax credit expired in 2003.

Last renewed in 2009 as part of the fiscal stimulus package, the production tax credit would cost $12.1 billion over 10 years, a sum opponents argue is too costly for an electricity source that is intermittent and hard to integrate into the power grid.

Advocates counter it would stimulate economic activity with manufacturing and construction jobs, be taxed at the federal, state and local levels, and be advantageous environmentally.

Some legislators, including wind state Sen. Chuck Grassley (R-Iowa), have proposed that the credit be renewed this year but gradually phased out over time. The proposal that passed in the Senate earlier this year called simply for a one-year extension.

Liz Salerno, chief economist for the American Wind Energy Association, said a one-year extension would be of little use. "Manufacturing is a 10- or 20-year investment," she told HuffPost in a recent interview.

It's difficult to attract significant investment with so much uncertainty in federal funding, she said.

"It's very unstable," said Huffman of the two-year tax credit. "Everybody that's worked in the industry has been through it. It's hard to plan. You learn to just go with it and what happens happens."