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The picture of the US wind energy industry looks markedly different looking back than it does looking forward. US wind energy capacity has been growing at a record rate this year, but the year-end expiration of a key federal tax credit is already slowing things down. [...]

Clean Power

Congressional Inaction Threatens Record Wind Energy Growth

The picture of the US wind energy industry looks markedly different looking back than it does looking forward. US wind energy capacity has been growing at a record rate this year, but the year-end expiration of a key federal tax credit is already slowing things down. […]

 
US wind-generated electricity capacity exceeded 50,000 megawatts (MW) in this year’s third quarter (3Q 2012) –enough clean, green renewable energy to power some 13 million homes, the American Wind Energy Association (AWEA) has announced in a press release. Some 4,728 MW have been added so far this year, with another 8,430 MW currently under construction.

The federal wind energy production tax credit (PTC) has been a big factor in spurring wind and clean energy development in the US, but a persistent Congressional stalemate and the politics associated with the 2012 national election are likely to leave the US wind industry twisting in the wind. The federal wind energy PTC is due to expire at year-end.


 

 

A Change in Wind Energy Momentum Due to Congressional Inaction

Activity in US wind energy development is slowing down markedly in advance of the wind energy PTC’s expiration, as projects take a fair bit of advance planning and preparatory work. Key players, including wind turbine manufacturer Vestas and other companies along the supply chain, have announced job cuts recently and noted that they are due to uncertainty related to the PTC renewal.

The US Congress just can’t seem to get its act together when it comes to acknowledging the increasingly urgent need for a US energy policy focused firmly on a sustainable, renewable energy path that takes us away from reliance on fossil fuels. All hope of an extension hasn’t been lost yet, however.

“The PTC incentivizes over $15 billion a year in private investment in U.S. wind farms,” the AWEA states in its Third Quarter 2012 Market Report. “A proposal to extend the tax credit for projects that start construction next year won bipartisan support from the Senate Finance Committee on Aug. 2, as part of an overall ‘tax extenders’ package. It now awaits action by the full Congress, expected in its lame duck session after the election.”

AWEA’s 3Q 2012 report highlights factors that have been driving record growth in US wind energy capacity. They include:

  • Greatly expanded U.S. manufacturing, which now makes up nearly 70 percent of the value of U.S.-installed equipment, cutting transportation costs.
  • Technological advances, such as higher towers and longer blades, which make turbines more efficient and further drive down costs.
  • The fact that more electric utilities are locking in 20- to 25-year contracts for lower-priced wind power, to the benefit of their consumers.
  • The federal Production Tax Credit for renewable energy, which has been kept continuously in place since 2005 and currently extends to the end of the year.

“This is what a successful policy looks like when it’s working, but whether wind will continue to be a bright spot in the U.S. economy now depends on whether Congress acts to extend the Production Tax Credit by the end of the year,” said Denise Bode, CEO of AWEA.

Several studies have shown the negative consequences of the US Congress and federal government’s de facto “stop-and-go, boom and bust” policy actions when it comes to enacting strong, proactive wind and renewable energy legislation. The issue has become a “hot button” issue during the Presidential election campaign.

Assessing the situation in Congress, Bode said: “We have the bipartisan support to get the job done, but it is up to Congress to bring it to a vote or else lose 37,000 jobs by the first quarter of next year.”

That’s the number of direct wind energy jobs that would be lost if the wind energy PTC isn’t renewed, according to an analysis conducted by Navigant Consulting. “Thousands of layoffs have already begun in wind energy measurement, development, and U.S. manufacturing, even as the construction sector remains busy on this year’s projects,” the AWEA notes.

Looking Back…

The situation looks much rosier when looking back at what’s been a record period of growth for U.S. wind energy. Some 1,833 MW of new capacity were installed in 3Q, bringing total US wind energy capacity to 51,628 MW as of Oct. 1, according to AWEA. There are more than 40,000 wind turbines installed across the U.S., with enough generating capacity to power all the homes in Michigan, Ohio, Iowa, Colorado, and Nevada combined.

Total newly installed capacity came to 4,728 MW year-to-date in 2012—40% higher than it was at the same time in 2011. The average size of turbines continues at around 2 MW.

Breaking out 3Q data regionally, AWEA found:

  • Top states for installed new wind capacity during the third quarter include Kansas, on track to install more than double the state’s previous wind capacity this year, with 473 MW added; Oregon (333 MW); Texas (281 MW); Oklahoma (229 MW); and Nevada (152 MW).
  • Nevada’s wind project was its first, making it the 39th state with utility-scale wind installations.
  • Across 29 states and Puerto Rico, there are currently more than 8,430 MW under construction, a record for this time in the year.
  • Texas leads the nation with 1,291 MW under construction, followed by California (1,022 MW); Kansas (836 MW); Oklahoma (734 MW); Iowa (597 MW); Colorado (496 MW); Illinois (480 MW); and Michigan (472 MW). In total, 10 states are on track to add at least 500 MW of wind this year, with Texas, California, Kansas, and Oklahoma on track to add over 1,000 MW each.
  • Utilities are locking in more wind power on long-term contracts. Over 80 percent of the new capacity coming online or under construction is covered by a long-term power offtake agreement, either through a power purchase agreement between a utility and a wind developer, or through direct utility ownership. In fact, projects online through the third quarter and under construction are either owned by or have contracted power with 68 different utilities.

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I've been reporting and writing on a wide range of topics at the nexus of economics, technology, ecology/environment and society for some five years now. Whether in Asia-Pacific, Europe, the Americas, Africa or the Middle East, issues related to these broad topical areas pose tremendous opportunities, as well as challenges, and define the quality of our lives, as well as our relationship to the natural environment.

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