Although wind prices have come down, the shale gas drilling boom has dropped the price of gas below $2.50 per thousand cubic feet. Coal is also a natural low-cost competitor, Kaplan said, but there are enough environmental regulations to slow the opening of new plants.
"If gas were to return to $6 or $8 per thousand cubic feet, wind would be competitive," he said.
The disappearance of the tax credit would be a serious blow to the industry, Kaplan said. Even if market conditions change in five years, and the price of natural gas rises in the U.S., the industry couldn't afford to let its plants and infrastructure sit idle waiting for the market. There is still growth overseas, particularly in China, he said, so the big companies won't disappear, but their U.S. capacity will suffer.
Denmark-based Vestas has already warned that it will lay off 1,600 workers at its Colorado factories if the tax credit is not renewed. Japan-based Mitsubishi Heavy Industries has scrapped plans for a $100 million plant in Arkansas. The American Wind Energy Association said up to 37,000 jobs would be lost without the tax credit.
Siemens said it is too early to say how much sales will fall with the loss of the credit or what the impact will be on the Hutchinson plant.
Congressional action looks pretty unlikely at this point.
U.S. Sen. Jerry Moran, R-Kan., introduced an amendment two weeks ago to the Senate's transportation funding bill to extend the wind tax credit by one year, but it was never voted on. Another amendment that includes a wind production tax credit failed last week after it didn't get the required 60 votes.
Moran said he favors a law that would phase out a subsidy over four or five years to give the industry the time it needs to become cost competitive. After that, he said, they're on their own.
But doing it this way, just dropping them off a cliff on Jan. 1, 2013, makes no sense when the state has so much to gain, he said.
"There is no state in the country that had more at stake in this than Kansas," Moran said.
It's still possible that a wind subsidy might work its way out of the Senate yet this year, but the U.S. House of Representatives is another matter.
The House includes a large contingent of staunch conservative budget hawks and opponents of alternative energy subsidies, including U.S. Rep. Mike Pompeo, R-Kan. He said the House is highly unlikely to pass any bill with alternative energy subsidies.
But, he said, if the Senate were to pass something this year, it would go to conference committee to be reconciled with the House version. When that happens, he said, there's no telling whether a tax credit would get through.
Pompeo said he objects to the tax credit, as he does with all government incentives for any kind of energy. Having government rather than the market pick winners winds up costing taxpayers money, he said.
He introduced a bill in the House to strip all energy tax credits out of the federal tax code, including those for oil and gas production, but it was defeated last week.
"It's a good first step," he said of his bill.
Regardless of what happens to the wind energy industry, Westar and other major Kansas utilities have a legislative mandate to produce or buy 20 percent of their electricity from renewable sources by 2020.
Westar Vice President Kelly Harrison said the utility will be up to 13 percent - if the turbines are working at 100 percent capacity - when two new wind farms under construction come on line.
Getting into wind power has been expensive. The prospect of new wind farms in western Kansas was one of the reasons behind the decision to build twin 345-kilovolt power lines from the Wichita area to Spearville, Kan., for an estimated $456 million. The bigger reason is to clear up long-time bottlenecks.
Harrison said the new power lines are needed even if there are no more wind farms in western Kansas. And adding wind power to Westar's mix was important. It already has coal, nuclear and natural gas power.
"History has shown that because of our predecessors at Westar mixing sources, we have some of the lowest rates in the nation," he said.
Twenty-nine states have some kind of legislative mandate for utilities to buy a percentage of renewable energy. If that continues to stand in the coming years, it guarantees a growing demand for a set amount of wind-generated electricity.
That means that, at some point, the price of wind power could become competitive again.
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