MI’s Growing Wind Industry Lobbies for Continuation of Tax Credit

8/22/11Follow @XconomyDET

Last week, Congressman John Dingell (D-MI15) paid a visit to the Canton, MI-based Danotek Motion Technologies, a startup company developing products for the wind, microgrid, and transportation sectors. Dingell was there to announce his support for extending the Production Tax Credit, a federal income-tax credit that supports the production of electricity from utility-scale wind turbines and is set to expire on December 31, 2012.

Peter Gibson, vice president of sales and marketing for Danotek, says that the expiration of the credit could have a disastrous effect on Michigan’s growing wind-energy industry, which has given out-of-work auto suppliers new life by allowing them to transfer the manufacturing skills and infrastructure they perfected for the car industry to a burgeoning new sector.

Gibson says everyone in the wind supply chain directly benefits from the Production Tax Credit (PTC) because it allows those in the industry to feel secure that federal support will continue, thereby increasing demand for turbines and components.

“There’s a long lead time in the development of wind farms,” he adds. “Right now, there’s a lot of activity planned through 2012 but not much after because of the uncertainty. European suppliers have a 10-year horizon, as opposed to the United States, which only has until the end of 2012.”

Gibson says his company, which does business globally, relies heavily on Michigan suppliers. Without the incentive of the PTC, which offers a credit of 2.2 cents per kilowatt-hour for the production of electricity from utility-scale turbines, domestic demand for turbines would fall, he says. That would hit domestic component makers particularly hard, he adds, since the cost of transporting parts to overseas markets would be prohibitive.

“If the PTC goes away, it takes away the only significant federal support given to the development of the domestic wind industry,” Gibson says. “It’s only a fraction of the tax support given to mature energy industries. Wind energy is a young industry, but it’s one area where North American companies have a good opportunity to grow significantly.”

By comparison, says Jim Martin, director of strategic policy for the American Wind Energy Association (AWEA), fossil fuel industries have received tax credits for 90 years—and they are are seldom debated or even heard of because they’re permanent. Though the PTC has been in place since 1992, and it continues to be … Next Page »

Sarah Schmid is the editor of Xconomy Detroit. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET

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