I recently posed the question, Will the wind power industry survive without the 1603 cash grant, but fortunately the answer to that can be postponed for another year. Last week Congress finally agreed on the controversial extension of the bush era tax credits. And while that in and of itself is good news for businesses across the country, what’s more is that included in the bill was a one year extension of the ARRA 1603 cash grant program.
This, of course, is great news for the wind industry. For while the industry may be able to survive without federal subsidies, it will certainly grow more with some extra cash. In a response to this development, Denise Bode, CEO of AWEA, wrote, “This is a great holiday present for the 85,000 American workers in the wind energy industry, tens of thousands of whom will now be able to get back to work in a sector that has been a bright spot in the recession so far. Orders will be on the rise for new wind power, and investors will put more capital into the U.S. economy because of what happened in Congress last night.”
So, what does this mean for you? That’s the real question after all, isn’t it? Well, if the past is any indication of the future, then we can safely assume that a 30% decrease in the installed cost of wind power will result in an even greater increase in the number of new installations.
Note the graph to the right. This graph shows the annual installed wind power generating capacity by MW for the United States. As you can see 2001, 2003, and 2006-2009 have been stand-out years. It may also interest you to know that these years closely correlate with that addition of federal stimulus plans such as the Investment Tax Credit (ITC) or the more recent Production Tax Credit (PTC). Furthermore, it wasn’t until the addition of the ARRA 1603 cash grant program that the wind industry really took off.
Now, you may already be aware that 2010 was an especially bad year for the wind industry. Orders fell by nearly 50% from 2009 and subsequently suppliers, constructors, developers, and manufacturers all took a big hit, especially with the impending end of this tax credit. But just look at the graph, this has happened before, ie. 2000, 2002, 2004. Owners were looking at their situation and determining that if they placed orders for turbines but were not able to get their project in the ground by the end of the year, then they would essentially be paying 30% more than they had before. So, it stands to reason that these owners were holding on to their money.
I mention all of this because we are now at the other end of the situation. Owners have one full year to get their projects started, those who already have received permitting will be placing orders. Those manufacturers receiving the orders will begin to produce, requiring more help from their suppliers. Constructors will receive more RFP’s, they will put out more bids, and they will receive more jobs. And when all is said and done, the industry will be thriving; just as it was before the recession.
So, how do you get involved and ensure that you don’t miss this expansion? Well, you get your company out there. You visit with clients face-to-face. You promote your companies and highlight where and why you should be involved in the industry. After all, how can you expect manufacturers to ask you for your help if they don’t even know where you can help them?
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