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By Jeremy Fudge
June 29, 2016
With oil prices plummeting, the Texas energy industry is experiencing yet another down cycle. But silver linings can still be seen in these dark days that could lead to a brighter future than ever imagined.
Last December, Congress passed and the president signed legislation extending the Production Tax Credit (PTC). What’s the big deal with this tax incentive? It could hold the key to unlocking the growth of the next great Texas industry – the wind energy industry.
The PTC offers wind developers a credit of $0.023/kWh for electricity generated to the power grid. The fact that the new law extends this tax provision for five years means that entrepreneurs and businesses will have plenty of time and incentive to invest in the wind energy market. In fact, one of the barriers to entry in this marketplace has been the amount of lead time it takes to start a wind project. So this new law potentially could create a boom as entrepreneurs get started on new wind projects knowing that the federal government isn’t going to change the rules on them any time soon.
With the traditional oil and gas market down – and with jobs being lost in that sector – it’s good news for Texas business that a new frontier is opening in the energy sector. This state has always had the necessary wind and the right kind of entrepreneurs to create a wind market boom. The problem has been that the tax incentives from the federal government haven’t been enough to encourage investment. Now that has changed.
But with the likely growth in the wind market in Texas will come the need for highly skilled labor. The wind market is a highly specialized area that requires unique skill sets. In addition, Texas is very much a part of the global marketplace when it comes to energy. In fact, with the recent ending of the oil export ban, Texas oil and gas can now go all over the world. Likewise, many of the leading wind businesses are based overseas yet have a presence in Texas. As a result, to make the hope of a wind energy boom a reality in Texas, these companies will need access to L-1 visas. An L-1 is a non-immigrant visa that allows companies to bring in their experts on a temporary basis to get the project moving forward. This is a win-win situation for everyone. As an L-1, these employees are strictly here on a temporary basis and pose no threat to U.S. workers. But their impact is far from temporary. If these workers can help get the Texas wind energy going strong, there will be countless jobs for Texans for years to come.
This is a great example of how economic policy and immigration policy can and should work together. This is not a zero-sum game. If done correctly, immigration policy can and should benefit our Texas economy.
But there are huge challenges facing Texas companies trying to enter this market. And the most important challenge is labor. The wind market is a global market, meaning that much of the labor expertise is found overseas. The wind industry in Texas is still relatively young; as such, it’s difficult for employers to find the right employees. For example, the largest wind turbine in the world is the Vestas V164 8MW found in London. In the last few years while Texas energy companies were exploring shale plays across the state, scientists and engineers in England were focused on the wind turbine. As a result, much of the knowledge needed to make the Texas wind market take off is found in workers overseas.
Texas wind companies will simply have to import experts from other countries. In some cases, it may be a Texas-based project that needs to hire a wind power turbine manufacturer from Spain. Or perhaps another project will need help contracting with a Korean company that has expertise in building towers. Maybe another will want to hire a European company to build the blades. Whatever the situation, the end benefit will go to the people of Texas in the form of more energy options and more jobs created by this growing industry.
At Berry Appleman & Leiden, we work with companies both foreign and domestic and help ensure that gaps are filled and needs are met. And we know that when it is done correctly, immigration policies like L-1s make sense for everyone.
As the Texas wind market gets set to take off, keep an eye on the labor issues that will accompany it. To truly create more Texas jobs and another great Texas industry, we need the best workers and the best minds in the world.
Jeremy Fudge is the managing partner of Berry Appleman & Leiden and is responsible for the administration of the firm’s operations around the world. He is based in Dallas.
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