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Rollercoaster Policy Threatens US Wind Energy’s Record-Setting Pace

America’s wind energy industry may be coming off a record-setting 2012 but could potentially soar even higher – if federal policy uncertainty is resolved in time to help overcome the natural gas boom and fast-closing state renewable energy targets.

This outlook from the US Department of Energy’s “2012 Wind Technologies Market Report,” underlines how important stable government policy is to growing a clean energy economy and reveals the economic potential of a future powered by wind energy.

America’s wind energy industry may be coming off a record-setting 2012, but it could soar even higher – if federal policy uncertainty is resolved in time to help overcome the natural gas boom and fast-closing state renewable energy targets.

This outlook from the US Department of Energy’s “2012 Wind Technologies Market Report underlines how important stable government policy is to growing a clean energy economy and reveals the economic potential of a future powered by wind energy.

A record 13.1 gigawatts (GW) of new wind energy was added to the US grid in 2012, representing the largest source of new electricity generation capacity and powering a domestic green economy. But while massive potential still remains for US wind energy, policy uncertainty looms large for future growth.

Record 2012 Leads Global Markets

Wind energy additions set a new mark for capacity additions in 2012, fueled by the planned expiration of the federal Production Tax Credit (PTC). The 13.1 GW of new capacity added to the grid was 90% higher than in 2011 and 30% higher than the previous record set in 2009.

Cumulative wind capacity grew 28% in 2012, and now totals 60 GW across America – roughly 4.4% national electricity demand. Despite the natural gas boom, wind energy represented 43% of all nameplate capacity additions last year, making wind the largest resource added to the grid in terms of gross capacity for the first time.

The DOE reports wind’s growth totaled $25 billion in investment and narrowly bumped the US back into the global lead for annual wind power additions, with 29% of the total global market – nearly double the 16% market share recorded in 2011.

“As the fastest growing source of power in the United States, wind is paving the way to a cleaner, more sustainable future that protects our air and water and provides affordable, clean renewable energy to more and more Americans,” said Energy Secretary Ernest Moniz.

Wind Energy Strongest In Texas, But Growing Across US

Once again, Texas led all US states in capacity additions and now boasts more than twice as much wind capacity as any other state, but wind power continues to spread across America. Texas installed 1,825 megawatts (MW) of new wind energy capacity, edging out California, Kansas, and Oklahoma, who added 1,656 MW, 1,441 MW, and 1,127 MW, respectively.

10 states now have more than 2 GW installed capacity, 9 states now have enough wind capacity installed to supply more than 12% of their total in-state electricity generation in an average year, and wind energy supplies more than 20% of total demand in 3 states (Iowa, South Dakota, and Kansas).

America’s Green Economy Grows Around Wind Turbines

Beyond an environmental boon, the rapid expansion of wind energy in America has also been a massive economic stimulus, notes the DOE. US-owned GE Wind led the charge with 5 GW of wind turbines built in 2012, tying Vestas as the top supplier of turbines worldwide.

The American Wind Energy Association (AWEA) reported that 80,700 green-collar workers were employed by the US wind energy industry in 2012, 5,700 more than 2011, and seven of the top ten turbine suppliers to US markets had one or more manufacturing facility operating domestically in 2012. These economies of scale have driven prices down, with turbine prices and installed project costs both trending several hundred dollars cheaper per installed kilowatt.

While the US is still a large importer of wind energy equipment, the growth in installed capacity has outpaced import growth, meaning a growing percentage of equipment is now domestically sourced. Imports have declined from 75% in 2006-2007 to just 28% in 2012, and exports have risen from $16 million in 2007 to a whopping $388 million in 2012.

Market Potential Still Not Tapped Out

Wind energy’s growth in the US is staggering when all the numbers are considered, but the market’s potential still isn’t tapped. More than 125 GW of new wind capacity is in the transmission interconnection queue of regional grid operators, meaning the amount of wind energy on the grid could theoretically triple if all potential projects were approved.

Grid operators are also implementing new technological innovations to help increase the amount of wind energy that makes it onto the grid, including wind forecasting, larger balancing areas, and efficient turbine operationAnd even though zero offshore wind turbines are currently spinning in American coastal waters, the nascent industry could heat up quickly. 10 potential projects are shaping up in New England and off Virginia, and 8 projects totaling 2,380 MW are well along in the development process.

“The tremendous growth in the U.S. wind industry over the past few years underscores the importance of consistent policy that ensures America remains a leader in clean energy innovation,” continued Moniz.

As Always, Policy Will Be Key

But despite the environmental and economic benefits of wind energy’s expansion, federal and state policy still remains unclear, threatening both private investment and future growth. The DOE reports uncertainty over the PTC led to lower tax equity and debt commitments, effectively turning the “end-of-2013 PC construction deadline into an end-of-2014 commercial operations deadline.”

State renewable energy targets have helped offset this federal uncertainty, but have only supported 3-5 GW worth of new additions annually, outstripping the growth needed to keep America’s wind industry growing. In addition, the DOE notes that many states are approaching their renewable energy targets, indicating future growth may slow, and may jeopardize the DOE’s 20% wind power by 2030 target.

The DOE’s report outlines many other metrics that show just how fast wind energy has grown in America, but the biggest takeaway is clear — unless federal and state governments clarify the tax incentive and renewable policy, the US wind industry could soon find itself in the doldrums.


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Written By

Silvio is Principal at Marcacci Communications, a full-service clean energy and climate policy public relations company based in Oakland, CA.

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