Wind Tower Shutdowns

Brian Hicks

Written By Brian Hicks

Posted August 9, 2012

In an unusual punctuation to Senator Harry Reid’s Clean Energy Summit in Las Vegas, DMI Industries, a wind energy company, declared that it will shut down two wind tower factories by 2013.

Primarily, Forbes said, the company pointed to a dearth of wind tax credit renewal prospects in Congress. Those credits will be expiring at the end of this year, and so far, it is true that Congress hasn’t shown any signs of commitment to a renewal (although there is hope the President will push for renewals soon).

The closures will cause around 384 people in Oklahoma and North Dakota to lose their jobs.

From Forbes:

“The wind industry’s present economics, substantially driven by the absence of a Production Tax Credit renewal by the U.S. Congress, the lack of a predictable national energy policy, and by low natural gas prices has contributed to a dramatic decline in the demand for wind towers,” OtterTail said in a statement.

OtterTail Corporation (NASDAQ: OTTR) owns DMI Industries.

The DMI story began in Tulsa in 2008, and that factory employed almost 300 people at one point.

The wind energy industry is dependent on government support, and startup costs for these systems tend to be high. Their costs are paid off over time.

After the 2009 stimulus act, renewable sectors experienced a boom. From 16,800 megawatts of installed wind energy capacity in 2008, we’ve already gone to almost 50,000.

The tired rhetoric of “market competition” simply does not apply to the scenario for renewable energy developers, who need a secure support base to launch their operations safely in order to ensure long-term profitability.

But Congress still has yet to agree to extend the tax credits, which means the whole issue is up in the air. Perhaps literally.

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