Vestas warns of tax hit to turbine makers The US wind turbine market will shrink by up to 95 per cent if a crucial tax credit for wind power is allowed to expire at the end of the year, according to Vestas, the world's largest turbine manufacturer by output. Morten Albaek, chief marketing officer of Vestas of Denmark, told the Financial Times the market was facing the threat of a "significant decline," of between 75 and 95 per cent. The US was the world's second-largest market for wind power in 2011 after China, and fears of a collapse in demand are already forcing international manufacturers to cut jobs and scale back expansion plans. Vestas" planning is based on the assumption that a slump in the US market will contribute to a fall of about 20 per cent in its worldwide production next year. The production tax credit for wind power, first introduced in 1992 and worth $22 for every megawatt hour of electricity generated, is one of 41 US tax provisions scheduled to expire at the end of the year. Many Republican politicians say it should not be renewed, though President Barack Obama is in favour of retaining the credit, as are most other Democrats. Mitt Romney, the Republican presidential candidate, has opposed extending it, and a recent attempt to rally support in the House of Representatives was easily defeated by the Republican majority. Wind farm developers say it would be hard to sell power without the tax credit because of competition from plants burning natural gas, which has fallen sharply in price in the past four years. Vestas in 2011 supplied 29 per cent of all turbines installed in the US, nearly as many as General Electric, the US industrial group which is the market leader. Vestas has begun to unwind that expansion, however, announcing 120 job cuts this year, joining other companies such as Siemens, which announced 615 lay-offs last week. For now, US turbine manufacturers are busy filling orders as developers race to complete projects before the credit expires. The US market is expected to reach a record this year, with installations of about 12,500 megawatts of wind generation capacity, almost double last year's. Keith Sherin, GE's chief financial officer, told analysts in July that his company had shipped 726 wind turbines in the second quarter, up from 269 in the equivalent period of 2011. However, GE's turbine orders were down 37 per cent over the same period, as developers anticipated the prospect that the credit would not be renewed. Vestas has also seen US orders dry up. Mr Albaek said he was "positive" that the production tax credit would be extended eventually. Republicans are not united on the issue, and leading figures including senators and governors have expressed support for extending the credit. However, Matt Kaplan of IHS, the research group, said even if it were renewed later this year or early in 2013, there would still be a steep decline in the turbine market because of the hold-up in new orders. "It's a very difficult time for the wind market," he said. Manufacturers are going to go from making turbines as fast as possible to almost a complete stop. Vestas has warned that 1,600 jobs are at risk if the credit is not renewed, and the American Wind Energy Association, the industry group, has predicted 37,000 jobs would go across the industry.