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Patrick Springer, Published August 13 2012

Uncertain skies for wind energy industry

FARGO – More than 800 jobs directly involving wind-energy manufacturing in North Dakota are at stake as an important tax incentive for renewable energy is set to expire at year’s end.

DMI Industries in West Fargo, a manufacturer of wind towers, is slated to be sold, placing 216 jobs in question. DMI’s plant in Tulsa, Okla., will lay off 167 workers in November.

LM Wind Power, a wind-turbine manufacturer with about 630 jobs in Grand Forks, has not commented publicly on their status. But the company has announced job reductions of 94 full-time and 140 temporary workers in Arkansas.

The company didn’t return calls seeking comment Monday, but a local economic development official said LM Wind Power, based in Denmark, has global sales that could keep workers on the job.

The plant in Grand Forks is very productive, said Klaus Thiessen, president of the Grand Forks Region Economic Development Corp., which has worked with LM Wind Power.

“We take some comfort in that, as much as you can,” he said.

Nationally, about 37,000 manufacturing jobs tied to the wind industry are at risk unless Congress extends the production tax credit for wind-energy manufacturing, according to the American Wind Energy Association.

Although the tax credit has bipartisan support – as shown by a recent vote of support in a Senate committee – its extension remains under a cloud of uncertainty, wind proponents complain.

“Businesses need certainty,” Ellen Carey, a spokeswoman for the American Wind Energy Association said Monday. “You’re already feeling the effects in the supply chain.”

The wind production tax credit, equal to 2.2 cents per kilowatt hour, costs $1.83 billion but generated business investment of $15 billion last year, Carey said.

“You have to look at what that’s leveraging,” she said.

“I think folks are optimistic” that bipartisan support will translate into an extension, she added.

Meanwhile, the once-booming growth in North Dakota wind farms has slowed in recent months. The state has 1,460 megawatts of installed wind capacity and another 5,000 megawatts that have been proposed or are in development.

Major activity appears focused on completing two segments of the Bison wind farm complex in Oliver and Morton counties, with combined capacity of 210 megawatts.

“It’s slowed down out there,” said Jerry Lein, an engineer who tracks wind development for the North Dakota Public Service Commission. “The demand for electricity is down with the economy.”

Wayde Schafer, an activist with the Sierra Club in North Dakota, said renewable energy sources like wind should have stable and predictable tax incentive supports.

“They should be long term,” he said. “These temporary renewals of the protection tax credit cause instability in the industry. It’s a disincentive to get into the wind business.”

By contrast, mature industries like the coal-fired electricity industry enjoy significant subsidies, he said.

For example, Schafer said, Powder River Basin coal mined in Wyoming and Montana was sold at $28.9 billion below market rates over 30 years, depriving federal taxpayers of revenues from federally owned coal, according to a recent analysis by the Institute for Energy Economics and Financial Analysis.

Also, federal tax credits for so-called clean coal will have totaled $1.3 billion from 2007-2013, according to a report by the Congressional Research Service. Several billion dollars more in support for clean coal came from stimulus spending, according to the report.

The fate of the production tax credit could be determined by the GOP-controlled House, where conservatives have been critical of tax breaks and spending proposals. Mitt Romney, the presumptive Republican presidential candidate, opposes the wind tax credit, but President Obama supports it.

Rep. Rick Berg, R-N.D., said he supports extending the wind energy credits, but said the need for the relief is a symptom of the need for tax reform.

“These renewable energy credits are needed now, but I will continue fighting to provide much-needed larger goal of comprehensive tax reform to create long term stability and certainty for businesses across the country,” Berg said in a statement.

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Readers can reach Forum reporter Patrick Springer at (701) 241-5522