WIND LEADERS WARN ON WEAK RES

Wind Industry Leaders Warn Congress That A Weak RESCould Cede Jobs to Asia, Europe
Christine Real de Azua and Shawna Seldon, May 15, 2009 (American Wind Energy Association)

SUMMARY
Important wind industry leaders sent a letter to Congressional leaders urging them to increase the New Energy requirements in the national Renewable Electricity Standard (RES) that is part of H.R. 2454, the American Clean Energy and Security Act of 2009 (ACESA), the Waxman-Markey energy/climate legislation coming to the full committee for mark up May 18.

The letter was addressed to Senate Majority Leader Harry Reid (D-Nev), Senate Minority Leader Mitch McConnell (R-Ky), Speaker of the House of Representatives Nancy Pelosi (D-Calif) and House Minority Leader John Boehner (R-Ohio). It was copied to Senator Jeff Bingaman (D-NM), Chair, Senator Lisa Murkowski (R-Alas), Ranking Member, and Members of the Senate Energy & Natural Resources Committee; Representative Henry Waxman (D-Calif), Chair, Representative Joe Barton (D-Tex), Ranking Member, and Members of the House of Representatives Energy & Commerce Committee

The letter was signed by Victor Abate, Vice President for Renewables, GE Energy; Jan Blittersdorf, President and CEO, NRG Systems; Denise Bode, CEO, American Wind Energy Association; Steve Dayney, CEO, REpower USA; J. Cameron Drecoll, CEO, Broadwind Energy; Victoria M. Holt, Senior Vice President, Glass and Fiber Glass, PPG Industries; Steve Lockard, President and CEO, TPI Composites; Michael Peck, Director of Media, Institutional & Labor Relations, Gamesa; Roby Roberts, Senior Vice President of External Relations, Vestas Americas; and David Willett, Vice President, Manufacturing, Clipper Windpower

All across party and regional lines, the public wants a strong RES. (click to enlarge)

Key points in the letter:
(1) It expresses appreciation that the Committee recognized the need for an RES.
(2) It expresses concern that the bill’s compromise standard that requires U.S. utilities to obtain 15% of their power from New Energy sources by 2020 is significantly lower than the target of 25% New Energy by 2025 in President Obama’s campaign platform and in the legislation’s discussion draft as well as the 20% by 2021 standard in Senate legislation now being developed by Senator Bingaman’s Committee.
(3) It says the weakened standard will not drive the potentially billions of dollars of investment by wind companies in U.S. manufacturing and production that will produce a long term stream of job growth and revenues but will incline wind companies to look overseas to Europe and Asia where there are at least 37 countries, including China, that have written policies assuring long-term New Energy growth.
(4) The RES is one of the strongest ways to establish long-term stability in New Energy growth. It allows investors to estimate the value of a facility or installation over its projected lifetime.
(5) The U.S. cannot expect wind manufacturers and producers to make a long-term commitment involving billions of dollars if the country is not willing to do so.
(6) The wind industry’s response to past federal policy inconsistencies has demonstrated clearly and unequivocally it will respond to the removal of strong policies by removing itself.

This bill's provisions won't provide the same benefits. (click to enlarge)

COMMENTARY
The production tax credit provided as an incentive to the wind industry over the last decade never ran for more than a year and was interrupted 3 times. The result of this short-term policy was a series of booms and busts in the wind industry that prevented investment with an eye on long term growth. President Obama’s campaign promise to put through an RES that would provide stability through 2025 inspired wind producers and manufacturers to draft ambitious plans.

U.S. wind installations went from having less than 25% of their turbines manufactured domestically a few years ago to a 50% domestic count at present. International manufacturers were laying plans to up that level of production.

All those plans are now being reconsidered.

Wihtout strong, long-term policy, this will not continue. (click to enlarge)

According to the wind industry leaders who signed the letter, a 10-year policy will not justify the enormous investment necessary to build a U.S. manufacturing base. The nation, therefore, is “on the verge” of driving manufacturers to Asia and Europe where there are long-term policies.

Most of the major European nations have made major commitments through 15- and 20-year feed-in tariffs. China has set a 100,000-megawatt wind capacity goal for 2020. These are the kinds of policies that justify billion-dollar investments in manufacturing infrastructure. At stake is an inestimably immense amount of domestic revenue and perhaps 100,000 or more domestic jobs.

In the absence of a long-term policy, the wind industry leaders say, the U.S. wind industry is looking at a lost decade.

It will only add to the fight against climate change. (click to enlarge)

QUOTES
- Roby Roberts, Senior Vice President of External Relations, Vestas Americas:“Vestas, the world's largest wind turbine supplier, plans to invest $1 billion in manufacturing facilities in the U.S. The company is also aggressively establishing a U.S.-based supply chain. By 2010, we expect to have over 4,000 employees in the U.S. Vestas is making these investments in the belief this Administration and Congress would follow through with its commitment to create a long-term clean energy policy…”
- Edward Lowe, GE, February 26, 2009, Testimony to House Committee on Energy and Commerce: “If Congress were to establish a Federal RES this year, GE would…explore the expansion of existing wind turbine assembly facilities and addition of new facilities…With a long-term stable policy GE can foresee the significant expansion of current blade and drive train supplier facilities and investment in 4-6 new tower manufacturing facilities. These investments could result in the creation of approximately 3,000-5,000 new jobs…[W]e are aware of 10 to 12 foreign suppliers who have expressed a strong interest in opening facilities in the U.S., but are awaiting a long term policy signal”
- Jan Blittersdorf, President and CEO, NRG Systems: “…Our company has been in the wind industry for over 25 years, and during that time we have weathered the boom-and-bust cycles of inconsistent federal policies that have hobbled our industry. An RES would provide welcome certainty for investors, encourage the development of clean wind energy, and enable us to tackle climate change right away.”
- Michael Peck, Director of Media, Institutional & Labor Relations, Gamesa: "…Pennsylvania has its own state-specific portfolio standard that has made the commonwealth a highly competitive place to do business for renewable energy development --- so much so that Gamesa decided to locate its U.S. headquarters, East Coast development office and North American manufacturing facilities in the state. Since 2005, the company has invested more than $200 million in Pennsylvania and employs nearly 800 workers. A national renewable electricity standard puts the entire country on the same green economy page…"

click to enlarge

- Steve Lockard, President and CEO, TPI Composites: "…In Newton, Iowa, TPI replaced over 300 jobs lost when Maytag left town. We are looking to create more Newton type stories. A significant Renewable Electricity Standard would provide that needed signal."
- Steve Dayney, CEO, REpower USA: "REpower believes passage of long-term policy supportive of wind energy, such as a national RES, provides a strong signal…Absent such long-term stability the business case for investment becomes much more difficult to justify."
- Victoria M. Holt, Senior Vice President, Glass and Fiber Glass, PPG Industries: “At PPG Industries…we have invested roughly $20 million to retool factories in North and South Carolina to manufacture fiber glass used in wind turbine blades, supporting hundreds of green manufacturing jobs in the region. A national RES would provide the long-term commitment the private sector needs to make capital investments in new factories and capacity…”
- David Willett, Vice President, Manufacturing, Clipper Windpower: “…To keep supply and jobs in the U.S., we urge support of a national 25% RES which will bring stability to the industry and encourage investment in additional U.S. manufacturing capacity, creating thousands of new green jobs in the U.S. New domestic manufacturing capability, for components such as large diameter bearings, precision gears, large castings, towers, blades, and others must be put in place now to prepare the U.S. for the coming strong, wind turbine demand – failure to pass this important legislation will encourage a greater percentage of foreign content.”