Article

by Carey Gillam

• $30 million investment in Kansas facility
• Says tax incentives important for more investments

KANSAS CITY, Mo., Dec 3 (Reuters) - Investments in U.S. wind energy are continuing and primed to grow once questions about government financial support for the burgeoning industry are resolved, according to a key market player.

“There is a lot of potential in the U.S.,” said Eric Spiegel, CEO of Siemens Corp., the regional U.S. arm of the Germany-based Siemens AG.

Certain tax credits for developers of renewable energy projects expire at the end of 2010 and industry supporters are seeking extensions. Other incentives expire at the end of 2012.

Uncertainty about the future of the incentives has contributed to a slowdown in wind energy development this year.

Still, an initiative by the U.S. Department of the Interior to accelerate development of wind energy projects along the Atlantic coast was seen as a boost, Spiegel said.

“Energy efficiency is clearly something everyone is thinking about. There is quite a bit of money that wants to get focused on that,” Spiegel said in an interview with Reuters. “When the uncertainty is removed about these incentives... I think you’re going to see a lot of money put into this.”

Siemens most recently invested $30 million in a new 300,000-square-foot wind turbine nacelle assembly facility in Hutchinson, Kansas.

The facility, which officially opened on Friday and will employ nearly 400 when fully operational, will produce nacelles - the structure atop a wind turbine tower that holds electricity generating components - for the company’s 2.3 megawatt and 3.0 megawatt wind turbines.

Early orders of the nacelles are for a Puget Sound Energy project in Washington state.

Siemens also has a 600,000-square-foot wind turbine blade manufacturing facility in Fort Madison, Iowa, a Houston-based wind turbine service operation, a research and development center in Boulder, Colorado, and two gearbox factories in Elgin, Illinois.

All told, the company has invested more than $300 million in the United States in the last four years, Spiegel said. The market still looks strong, and the pace of orders has been good, but with fears mounting that government tax incentives might expire, a cautious tone is taking hold, he said.

Lawmakers will consider whether or not to extend Treasury rebates for solar and wind companies that are to expire at the end of December. That program provides a rebate to companies equal to 30 percent of the cost of their solar or wind energy projects.

As well a renewable energy production tax credit (PTC), which amounts to a credit of 2.1 cents per kilowatt-hour, is set to expire at the end of 2012.

Representative Fred Upton, who is seeking to become the new Republican chairman of the House Energy and Commerce Committee in the next Congress, said on Friday that the government subsidies for solar and wind companies “have become a crutch” and they need to be scaled back.

“The businesses are allowed to ignore the rules of survival in a competitive marketplace since they know that they will get their cash flow no matter what,” Upton said.

Supporters of the tax breaks argue they are needed to keep jobs and help the U.S. compete with other countries.

“If the tax credits don’t get extended you will see a downturn in orders,” said Spiegel. “Keeping tax incentives in place is pretty important.”

Still, Spiegel said over the long term, Siemens sees the United States as having to provide a support system for wind as it tried to attain sustainable energy independence and keep pace with China, India and other countries making active investments in new energy technologies.

“The U.S. can’t stay where it is,” he said.

(Additional reporting by Tom Doggett in Washington; Editing by David Gregorio)