Wind Power and Energy & Environment and Utilities

Indiana's wind power industry faces unclear future

September 17, 2012

Indiana's once-promising wind-power industry is facing an uncertain future as Congress debates whether to renew a tax credit that's set to expire by the end of the year.

A few years ago, Indiana had one of the nation's fastest-growing wind-energy industries with turbines along the rural horizon in north and central counties. In 2009, the state had the second highest power capacity for new wind of any state, according to the American Wind Energy Association.

But the recession slowed growth and a federal production tax credit that aids the industry's growth is set to expire Dec. 31 unless Congress acts to renew that credit in a heated election year.

"There's such uncertainty in the market right now, it just causes these people to go berserk," said Laura Arnold, who is on the board of directors of the Indiana Renewable Energy Association. "Uncertainty is not a positive stimulus for the growth of the industry."

Arnold told the Journal & Courier for a Monday story that if the tax credit abruptly ends then the wind energy sector will likely cool off, and that a gradual phasing out of the credit was preferable.

The credit is worth 2.2 cents per kilowatt hour produced or a payment of 30 percent of the project's eligible costs.

Arnold said one issue is certain to slow the decision-making process — the federal tax credit's expiration date falls during the upcoming lame duck session of Congress. She said she doubts the matter will be taken up before the election.

Indiana currently has 799 turbines producing 1,339.2 megawatts of power, according to the Indiana Office of Energy Development.

Expansions to the once rapidly growing 303-turbine, 500-megawatt capacity Meadow Lake Wind Farm in White County — and two smaller projects there — are stalled on the federal tax credit issue.

In Tipton and Madison counties, the first phase of a 200-megawatt and 125-turbine project is under construction and planned to be complete by the end of the year, but developer E-on Climate & Renewables said growth beyond that is uncertain.

Construction on the farm's first phase started this summer. But E-on Climate & Renewables product manager Andy Melka said the tax credit's expiration could hinder the wind farm's growth.

"The expiring tax credit does not affect Phase One, but it could affect the expansion phases we had planned," Melka said.

Indianapolis-based Performance Services, the developer on the wind farm project on land owned by Purdue University, said his project will move forward without a tax credit.

"That's clearly out of our control so if it happens, it happens," said Scott Zigmond, the company's vice president of sales and marketing. "We've invested a great amount of money and time. We're not going anywhere."

Wind farm projects usually contribute to economic growth in rural areas, typically bringing an influx of temporary construction jobs and millions or billions of dollars in capital investment.

Sen. Richard Lugar, R-Ind., said Friday at the fourth annual Collegiate Energy Summit at Purdue University that he supports the extension of the credit but acknowledged that wind farms "are not everyone's cup of tea."

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