Just how important is the U.S. Production Tax Credit (PTC) for renewable energy that is set to expire in December? Ask Ditlev Engel, CEO of Vestas Wind Systems, the world's largest wind turbine manufacturer. Engel predicts the U.S. wind turbine market will drop a whopping 80% next year if the incentive vanishes as expected.
The PTC offers a 2.2-cent per kilowatt-hour benefit for the first 10 years of a renewable energy facility's operation. Engel says the American wind industry which experienced a depressed 2010 has been "very busy" in 2011 and 2012 as developers look to take advantage of the PTC.
It is not a foregone conclusion the PTC will not be renewed, however, analysts estimate an extension is unlikely given it is an election year. The lapse of regulatory framework coupled with the current boom in development led Engel to his projection of an 80% market drop.
Engel cites research from the American Wind Energy Association that shows the last time the PTC was eliminated in 2002 more than 75% of the wind market "disappeared from one year to the next."
Exactly how this scenario will affect Vestas' business has yet to be revealed. Engel hinted that cutting jobs may be the unfortunate reality: "It is very difficult to keep them employed if there is no market." Vestas currently employs 3.500 people in the U.S.; the company may have to slash its American workforce by nearly 50% if the market dives as far as expected.
Vestas cut 2,335 jobs in Europe in January.
Read the full story at Reuters: Vestas CEO sees US market down 80 pct in 2013
Nathanael Baker is the Managing Editor of EnergyBoom. He has researched and reported on the issues of renewable energy, sustainability, and climate change for over two years. He has provided research to the New York Times and The Economist, as well as being published on different media outlets including, The Energy Collective.
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