Business has not exactly been booming for some wind turbine companies, according to a new report that found that one in four suppliers have gone with the wind in the past two years.
FTI Consulting reports that more than 120 wind industry suppliers have collapsed or gotten out of the wind business in the past two years. FTI notes that lagging economies and fears of having their subsidies taken away have wreaked havoc on wind-turbine suppliers.
According to FTI, 88 wind suppliers from Asia, 23 from Europe, and 18 from North America have failed or left the wind market as part of a “prolonged market contraction.” These 129 firms represent about a quarter of the roughly 500 companies making wind turbine components. Components “account for more than 95 percent of a wind turbine’s total cost,” reports CleanTechnica.
“The wind industry has been in the process of transformation since 2011 and the global wind supply chain is not matured yet,” said Feng Zhao, a director and head of the wind energy practice at FTI. “The exit/non-participation of so many suppliers delivers a dangerous signal to governments.”
One policy the FTI report specifically mentions is the federal wind production tax credit (wind PTC), a policy that has been hotly debated by Congress. The wind PTC is a subsidy that pays wind power producers $23 per megawatthour of energy for the first 10 years.
Along with state green energy mandates, the wind PTC has been a major driver for wind-energy production in the country. The PTC has been around for the last 20 years or so, and Republicans have largely been opposed to renewing it, saying two decades of subsidies is enough.
“How many billions of dollars can we put towards a sophisticated industry, where even the biggest beneficiaries of the credit, including executives and wind farm operators, admit that it’s not needed?” former Oklahoma Republican Sen. Don Nickles wrote in an oped. “The PTC truly is crony capitalism in its finest form.”
The wind PTC was allowed to expire at the end of 2014 after being briefly extended for about three weeks. The wind lobby continues to push for its extension, but has recently opened up to the idea of allowing the subsidy to phase out over time.
“The PTC was extended for a mere two weeks and is yet again expired, leaving the industry uncertain and imperiled,” Rob Gramlich, head of government affairs and public affairs at the American Wind Energy Association, told Bloomberg BNA.
“We don’t need the PTC forever, but simply letting it fall off a cliff doesn’t get us any closer to the end. The industry is working with the Congress, including [Senate Finance Committee] Chairman [Orin] Hatch, to craft a reasonable policy,” Gramlich said. Hatch is a Republican.
But continued uncertainty over the wind PTC is expected to continue to stifle the wind industry and more companies are expected to fail or back out of the market across the globe, reports CleanTechnica.
“To bring wind towards a position where it can compete head-to-head with conventional energy sources, it is imperative to find a balance between maintaining attractive and certain policy and reducing the burden on governments and consumers caused by paying renewable energy subsidy,” Zhao said.
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