BY LINDA BAKER
Wandering around the new Vestas headquarters in the Pearl District the other day reminded me of Ozymandias, that Percy Bysshe Shelley poem about the inevitable decline of all things, no matter how mighty. But whether the mighty in this case refers to the wind industry, which grew exponentially over the past few years but now faces an uncertain future, or the oil and gas industry, which has flourished for decades but is now up against a changing world, I cannot say.
What I can say is the City of Portland is continuing to bet on the potency of the wind energy sector. Last month, the Portland Development Commission voted in support of a $1.1 million grant to help keep the North American headquarters of energy developer Iberdrola Renewables in Portland. Vestas A/S, the Danish wind turbine-maker that has its U.S. headquarters in Portland, received an $8.1 million, 15-year interest-free loan from the city two years ago for its $66 million Pearl District headquarters that is slated to open this spring.
But as the city’s investment grows, the companies are cutting back. Last month, Vestas laid off more than 2,000 people worldwide, including an undisclosed number in the United States and Canada.
Iberdrola also cut jobs, 25 in Portland.
Low natural gas prices and the looming expiration of a key federal tax credit this year are behind the industry slump. The Production Tax Credit gives owners of wind energy farms a 2.2 cents-per-kilowatt credit on their U.S. income taxes--a subsidy has promoted more than $60 billion of wind energy investment in the last six years, and the creation of 400 manufacturing and wind industry supply facilities throughout the country, according to the American Wind Energy Association.
Now that boom is in jeopardy. “Regulatory certainty matters,” says Iberdrola spokesperson Jan Johnson. “With the credit due to expire, investment across the country in renewables will decline.” Iberdrola has already shifted its business strategy away from future development and toward operation of existing assets, Johnson said.
Should the credit sunset, Vestas could lay off as many as 1,600 workers, the majority in the company's Colorado factory, said Portland-based spokesperson Andrew Longetieg. Five years ago, there wasn't much wind energy manufacturing in the United States, Longeteig said. But today, there’s an entire supply chain in place supporting thousands of jobs. “There’s a lot more at stake than there used to be.”
That brings us back to Portland and Oregon, which have reaped the benefits of the state’s investment in wind over the past decade. As of 2010, the 1,920 megawatts of installed wind power in Oregon generated an estimated $3.1 billion in capital investment, PDC data shows.
Although uncertainties over federal energy policy—not to mention the revamping of Oregon’s Business Energy Tax credit last year —may limit that investment, PDC remains “firmly committed” to building a local clean energy cluster, said agency director Patrick Quinton. “We view our investment as a long-term bet."
Quinton said aggressive renewable energy mandates will continue to grow the sector and that “fundamentals” are not what drives the local industry. “It’s the assets we have in terms of talent, location, and the relationship between multiple companies."
The new Vestas headquarters might be considered one of those assets. Construction fencing prevented me from getting a close look at the building, which apparently includes a grand multistory atrium and myriad environmentally friendly features such as rainwater harvesting and rooftop photovoltaics. Outside, bioswales, curb extensions and street trees complete the green picture.
It’s an inspiring monument to an industry many hope will soon recover its ascendancy. But a month or two before opening, the building’s permanence feels uncertain. Then again, rapidly rising gas prices and yet another looming conflagration in the Middle East don't exactly ensure the future of the oil and gas industry.
At this point in history, it's unclear exactly who are the mighty — or if they will fall.
Linda Baker is managing editor of Oregon Business.