Published on November 5th, 2013 | by Zachary Shahan4
US Wind Industry Goes Into 4th Quarter With Strong Winds At Its Back
November 5th, 2013 by Zachary Shahan
If you’re not familiar with what has gone down in the US wind industry in the past year, here’s a quick synopsis (skip the next two paragraphs if you know the background well):
Despite fossil fuel and nuclear power competitors getting tax credits for many decades, the wind industry tends to have its guaranteed for just 1–3 years at a time. Last year, they were set to expire at the end of the year. The solution could have been simple — extend the tax credits for another year, saving tens of thousands of US jobs, helping the US manufacturing industry, and continuing to advance US leadership in one of the cleanest sources of energy on the plant.
Instead, certain leaders of a certain political party decided to sacrifice a strong and growing portion of the US economy by turning extension of the wind industry tax credits into a political game. In fact, leaders of that party actually let the tax credits expire this time. They finally extended the wind power tax credits for just one year a couple of days after they expired. Nonetheless, this did a few things: firstly, it resulted in tens of thousands of Americans losing their jobs; secondly, it resulted in a ton of wind power projects getting rushed through at the end of 2012. That resulted in a record year for wind power, in which wind power was the largest source of new power capacity in the US. But it also meant that projects scheduled to finish in early 2013 actually finished earlier, resulting in a very slow start to 2013.
US Wind Industry in Q3 2013 & 2013 As A Whole
The American Wind Industry Association (AWEA), which recently released the US Wind Industry Third Quarter 2013 Market Report, says that the market has now rebounded. Nonetheless, the lack of a long-term signal of support for wind power leaves the industry in a less-than-ideal state of being. “Lack of certainty over federal tax policies continues to keep wind energy from reaching its full potential in the United States.”
But wind power technology has continued to advanced, driving down wind power costs in the US and elsewhere. And the bottom line is that wind power is the cheapest option for new electricity generation in many if not most regions.
Utilities “have signed over 5,670 megawatts (MW) of new power purchase agreements (PPAs) and received approval to build over 1,870 MW of utility-owned wind power” this year. “These 7,500 MW of new wind projects are helping spur wind manufacturing companies to increase hiring, and driving construction starts.” 1,100 MW (or 1.1 GW) of new wind power projects broke ground in the third quarter, according to the new report, bringing the 2013 wind power construction total to over 2,300 MW.
Here’s more from AWEA on what the dropping costs combined with fair policies have resulted in:
The renewed push toward wind included multiple utilities procuring significantly more wind energy than their initial request for proposals called for, including American Electric Power’s Public Service Company of Oklahoma, which said it decided to triple that amount because of ‘extraordinary pricing opportunities that will lower costs for PSO customers by an estimated $53 million in the first year of the contracts.’
‘Utilities are investing in more wind power because it’s the smart thing for their ratepayers and their bottom lines,’ said AWEA Senior Policy Analyst Emily Williams. ‘Xcel Energy, Detroit Edison, Austin Energy, Omaha Public Power District, and American Electric Power’s Public Service Company of Oklahoma have all pursued contracts in excess of their initial requests for more wind this year, because wind is saving their consumers money.’
Xcel Energy recently told its ratepayers that “wind energy can save you money.” It also noted that “wind prices today are lower than other energy resources, like natural gas. And wind power purchased at firm prices will protect you from the uncertainty of rising fuel costs in the future.”
It was also happy to throw in a the green card: “with our new wind supply, we’re on track to reduce carbon dioxide emissions by more than 30 percent by 2020 from 2005 levels.”
Beyond 2013, Where Will We Go?
Notably, one big thing was changed with this year’s wind power production tax credit (PTC) extension. Projects don’t have to be finished by the end of the year to qualify, only extended. So, you can expect that a large number of projects will be started this quarter, even if they are not completed this year.
From AWEA: “Utilities are eager to take advantage of the PTC/ITC extension with at least 27 requests for proposals issued for wind, renewables or other capacity to date. These will lead to over 4,175 MW of new wind. Looking further ahead, 5,600 MW of new wind projects have secured long-term contracts, and another 1,900 MW have received state regulatory approval.”
Will wind power ever get the long-term tax credits that coal, oil, natural gas, and nuclear power get? Will it even matter?
I think a long-term extension of the wind power PTC would help, and would only be fair. But I don’t have much hope that the current Congress will put that through. And I think if the wind industry is left assuming that the tax credits are over, the industry will actually grow at a steadier, smoother rate. We’ll see.