It has been a tough year for companies in alternative energy.
Ever since Solyndra, a solar module maker, cost taxpayers half a billion dollars when it went bankrupt last September, Republicans have attacked subsidies for solar, wind and biofuels. Those subsidies have been steadfastly supported by President Obama, even as the presumptive Republican presidential nominee, Mitt Romney, has attacked them as a waste of money.
On Thursday, the wind industry convinced a key Senate committee that green can be good politics in red states as well as blue ones.
The Senate Finance Committee voted to renew a tax credit for wind power that is set to expire at the end of this year, with several Republicans joining Democrats to support extending the credit for one more year at a cost of $3.3 billion.
The provision, which will apply to projects under construction by the end of 2013, was included in a $200 billion package of popular tax breaks that the committee passed on a bipartisan 19-5 vote. The bill is expected to go to the Senate floor when Congress returns from summer recess, although it is unclear if the House will take up similar legislation.
The wind industry considers the subsidy, called the production tax credit, to be vital as it tries to make wind power more competitive with electricity generated from fossil fuels like coal and natural gas. Wind farms can generally choose to receive a continuing credit of 2.2 cents per kilowatt-hour of electricity produced or receive a one-time payment equivalent to 30 percent of the cost of developing a project.
The committee vote became enmeshed in the presidential contest when a Romney campaign spokesman said earlier this week that Mr. Romney would end the wind subsidy. “Mitt Romney believes it is time for a new approach to ensure our nation’s energy independence,” the spokesman, Shawn McCoy, told The Des Moines Register. “He will allow the wind credit to expire, end the stimulus boondoggles and create a level playing field on which all sources of energy can compete on their merits.”
That apparently prompted the committee to delay voting on the credit and the overall bill. But eventually, local economics trumped party loyalty and even concerns about the budget deficit.
As it turns out, wind turbines are more common in Republican legislative districts than Democratic ones. More than 81 percent of the installed wind capacity in the United States is in Congressional districts represented by Republicans, according to the American Wind Energy Association, an industry group.
Wind energy is a big industry in states like Iowa, represented on the committee by Senator Charles E. Grassley, and South Dakota, by Senator John Thune, who both supported the tax credit extension.
“This is still an infant industry even after 20 years, and probably for three or four more years it’s going to need a tax incentive to become a mature industry,” said Mr. Grassley, a longtime champion of the wind subsidy. “Do you want alternatives to fossil fuel or don’t you? If you want alternatives, they’re not going to get started if they can’t compete.”
Indeed, last summer, before the Solyndra scandal erupted, most of the Republican presidential candidates, including Mr. Romney, had expressed support for wind energy when campaigning in Iowa, signing a locally made wind turbine.
The wind industry says it invested $13 billion in 2011.
But industry leaders say that because the road from approval of a project to operation can take more than a year to travel, the uncertainty about whether the credit will be in place next year has already led to planned layoffs and downsizing. This year, the industry is expected to install 10 to 12 gigawatts worth of wind power, which would drop to 1 to 4 gigawatts a year if the credit expired, said Lisa Frantzis, managing director of renewable and distributed energy at Navigant, a consulting firm.
Wind companies, which have intensely lobbied lawmakers to extend the credit, were relieved.
“We applaud the committee for this act of leadership to move critical policies forward in a difficult environment,” said Denise Bode, the wind association’s chief executive. “This was an extremely important step to provide critical certainty to keep people at work in wind energy manufacturing and construction.”
Those in favor of extending the credit, said Jimmy Glotfelty, executive vice president of external affairs at Clean Line Energy Partners, a transmission developer, “want the jobs associated with the wind farms that can be developed today.”
“The other folks,” he added, “primarily also Republicans, see that getting the balance sheet of the country in order is the single most important thing — perhaps, you could say, at all costs.”
But even budget hard-liners like Senator Tom Coburn, a Republican from Oklahoma, a state with a lot of wind development, seemed unwilling to cut off the subsidy entirely. He introduced an amendment that would have kept the credit in place but diminished its value by 20 percent, beginning a phasing out that he said the industry could live with. The amendment failed, and Mr. Coburn voted against the bill because it included many provisions he opposed.
