Utility exec to feds: Save our tax break, or else

April 17, 2012, 10:18 PM UTC

Wind power plants

FORTUNE — If federal tax breaks for wind farms go away, wind-farm operators will stop building them, says Lewis Hay III, chairman and CEO of NextEra Energy (NEE), the goofily named holding company for utility operator Florida Power & Light.

“Wind power will go to virtually zero next year,” says Hay, if Congress allows a production tax credit for wind-power generation to expire at the end of the year, as planned. Hay, who recently announced his intention to retire as CEO of NextEra, urged attendees at the Fortune Brainstorm Green in Laguna Niguel, Calif., to contact their members of Congress to encourage them to extend the tax credit. The break pays for itself, Hay argues, because the taxes generated from wind farm generation quickly exceed lost revenues from the tax giveaway. Nearly 10 gigawatts of new electricity generation capacity are scheduled to go online this year, and flipping the switch on generation capacity triggers the federal tax credit. Hay estimates a similar amount will be built in 2013–if the credit is saved. (Ten gigawatts is the equivalent of about 10 nuclear power plants.)

Wind energy represents a tiny percentage of overall electricity capacity in the U.S., though it has been growing dramatically since 2001. The investment in wind power doesn’t work without government help, though, a problem made worse by the plunging price of natural gas. (Gas, particularly its production by hydraulic fracturing, or fracking, has been the defining issue of this year’s conference; pick up a copy of the latest issue of Fortune and read Brian O’Keefe’s outstanding article on how Exxon Mobil (XOM) learned to stop worrying (about oil) and love fracking.) Cheap and plentiful natural gas makes it difficult to pursue exotic alternative and renewable energy sources, including wind.

It’s not just the utilities that want an extension of the wind production tax credit. (Separate credits exist for solar and nuclear production that aren’t due to expire this year.) Stephen Bolze, president and CEO of wind turbine manufacturer General Electric’s (GE) power and water group, says the U.S. will lose out to China in wind-farm production if the tax credit expires. The two countries are currently running neck and neck in the wind game, says Bolze. GE has invested about $1 billion in wind in the last 10 years,

Wind may be a small portion of overall generating capacity in the U.S., but it has accounted for a large portion of new capacity recently. The Global Wind Energy Council, an industry group, said in a report Tuesday that 35% of new electric capacity in the U.S. last year was from wind farms. Unsurprisingly, it also argued for an extension of the tax credit. GE is one of the council’s backers.

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