WASHINGTON — Forget about parties, resolutions or watching the ball drop. To Iberdrola Renewables, New Year’s Eve will mean checking on last-minute details like the data connections between 169 new wind turbines in New Hampshire, Massachusetts and California and its control center in Portland.
All over the country, developers are in a sprint to get new wind farms up and running before Tuesday, when the federal wind production tax credit will disappear like Cinderella’s ball gown. After that, the nation’s wind-farm-building business will be at a virtual standstill.
The stakes of meeting the deadline are enormous. Wind turbines that are connected to the grid and in commercial service before midnight on New Year’s Eve are entitled to 2.2 cents for each kilowatt-hour they generate in their first 10 years, which comes out to about $1 million for a big turbine. As it stands now, those that enter service on Jan. 1 or later are out of luck.
The deadline is a bit like the April 15 one for filing income taxes, but “there are no extensions here,” said Paul Copleman, a spokesman for Iberdrola. To reduce the risk of missing it — a risk that increases when managing construction projects on mountaintops in New England in the winter — the company allowed more than a year for what are normally nine-month construction projects.
More than just individual projects are at risk; the wind industry says it expects installations to decline by 90 percent next year, with the loss of thousands of jobs. The erratic pattern of wind subsidies has spawned a boom-and-bust cycle, with supplier companies building factories that run at full production for months and then shut down when demand collapses.
The industry has long experience with drop-dead deadlines: Since the tax credit began in the early 1990s, it has expired three times, said Elizabeth Salerno, director of industry data and analysis at the American Wind Energy Association, a trade group based in Washington. Each time, new installations fell 73 percent to 93 percent, according to the association.
Congress, which last renewed the credit as part of the 2009 fiscal stimulus package, balked at an extension this year. Opponents argue that the money spent so far, about $14.7 billion, is enough, and that a renewal could cost about $12.2 billion were it to last for 10 years. They also complain that the credit allows wind machines to be profitable even when there is a surplus of electricity and the market price for it falls to zero.
The tax credit could be equal to anywhere from one-sixth to one-half of the revenue from the wind turbine, depending on electricity prices in the area of the generator.
Wind advocates say that the wind production tax credit did not cost the taxpayers any money, because it stimulated economic activity, in the form of manufacturing and construction, that was taxed at the federal, state and local levels.
Iberdrola’s wind farm near Rosamond, Calif., with 126 turbines, opened last week. The company said it was “extremely optimistic” that its 19-turbine farm in Monroe and Florida, Mass., and a 24-turbine farm in Groton, N.H., would be up and running by Monday night, but declined to say precisely when.
Iberdrola did not disclose the price of each wind farm, but the industry average is about $2 million per megawatt, meaning that the three projects may have cost a total of more than $500 million.
Wind advocates say they will seek to revive the tax credit when a new Congress convenes next month, but it will not be at the top of Congress’ agenda.
With the tax credit due to expire, very few developers are taking the early steps required to establish a wind farm, like negotiating deals to sell the power and ordering the equipment. Copleman, the Iberdrola spokesman, said his company had a variety of projects “at various stages” but was “unlikely to be pouring any concrete next year.”
For projects being wrapped up now, Salerno said, developers lined up power purchase agreements with utilities and then arranged financing a year and a half to two years ago, with the economics predicated on the tax credit.
The start-and-stop pattern of recent years has repeatedly affected companies up and down the chain, especially the highly specialized ones that make towers, blades and generators. Robert Thresher, a wind expert at the National Renewable Energy Laboratory, in Golden, Colo., said manufacturers were “trying to run down their inventory so they wouldn’t be caught holding turbines” after the market collapsed in January.
A study commissioned by the wind industry predicts the loss of 37,000 jobs as a result of the credit’s expiration.