Wind Energy Could Suffer Under US House Tax Bill Proposal

Nov 21, 2017

The tax reform bill passed Nov. 16 by the U.S. House could slow development in the wind energy sector by reopening a two-year-old deal.

One industry leader says they’ll need the Senate in their court to protect their current agreement, which phases out production and investment tax credits through 2020.

“The wind industry negotiated with a bipartisan group in Congress in 2015 to effectively tax reform ourselves,” TPI Composites President Steve Lockard says. His company is a major turbine-blade maker. He also serves on the board of the American Wind Energy Association (AWEA).

The House proposal would reduce the amount of those credits by one-third, which could lead to a 50 percent drop in new wind energy production, according to an analysis from Bloomberg New Energy Finance.

“We stand to lose 60,000 factory and construction jobs,” Lockard says. “There’s on the order of $50 billion of investment that would perhaps be cut in half.”

Lockard says the change would disproportionately affect rural communities, too, in that there would be fewer turbines and, therefore, less money for people who lease their land to wind farm companies and less tax income from those companies.

Wind energy and its production are important in parts of the Midwest and Great Plains, including Iowa, Kansas, the Dakotas and Oklahoma. Iowa generates 37 percent of its energy from wind, and Kansas 30 percent. (State figures are available here.)

But Lockard says support from senators, especially those from states that produce a lot of wind energy like Iowa, are likely to prevent the House language from surviving through Senate proceedings. The current version of the Senate tax reform bill does not include the changes to tax credits for the wind energy sector that the House bill has.

“The wind energy production tax credit is already being phased out under a compromise brokered in 2015. It shouldn't be re-opened,” Iowa Republican Sen. Chuck Grassley says this week in a statement. “I'm working within the Senate Finance Committee to see that the commitment made to a multi-year phase-out remains intact.”

Lockard says the proposal undermines the future credibility of federal deal-making.

“Any industry would be forced to think twice before inking a deal to invest billions of dollars in U.S. infrastructure if Congress made a habit of retroactively changing the rules,” Lockard says.  "It’s just a little insane to imagine doing that.”

Follow Amy on Twitter: @agamyinames