The US wind industry is booming, installing more in the first 9 months of 2014 than was installed throughout all of 2013. The figures come from the American Wind Energy Association (AWEA), which predicts 2014 will finish strong and push through to stepped-up installations throughout 2015.
According to the AWEA, 19 projects have already been completed in the United States this year, based on third quarter results released Monday.
“The American wind industry responded to the extension of the Production Tax Credit in 2013 by setting new records for the number of new wind farms under construction and reaching the lowest wind energy costs ever seen,” said the AWEA’s CEO, Tom Kiernan.
“With continued technological innovation, wind energy has become so affordable that it offers utilities and consumers an irresistible value,” he added, citing recent Department of Energy (DOE) data showing the cost of US wind power down by more than half over five years.
“We believe Congress will do what it takes so we can keep these U.S. factories open and offer this increasingly affordable source of electricity to more Americans, instead of seeing the 92 percent drop-off we saw in 2013 when the tax credit was last allowed to expire.”
With the cost of wind energy competing with all traditional means of energy generation, and according to some reports handily beating fossil fuels like coal, the boost to the US wind industry is no surprise.
That wind energy is outperforming coal is also no surprise, given the regularity with which such reports pop up these days. And while the US is often more well known for its solar industry, wind power has proven itself in the past. According to another report published earlier this year by AWEA, the US wind industry delivered 30% of all new generating capacity over the previous five years.
The US Wind PTC
The driving force behind the growth and subsequent uncertainty of the US wind industry has been the Production Tax Credit (PTC). The PTC provides a lower tax rate to US wind industry developers over the first 10 years of the project. Many challenge the need for renewable energy to be afforded governmental help, all the while forgetting that coal, for example, not only has a history of government incentives and subsidies, but relies on them to this day.
“The PTC helps correct flaws in the U.S. electricity market that does not value wind’s benefits for protecting the environment and consumers,” said Michael Goggin, AWEA Research Director. “Wind energy creates billions of dollars in economic value by drastically reducing pollution that harms public health and the environment, but wind developers do not get paid for that, even though consumers otherwise bear those costs.”
The US wind industry also recently received a boost after the US Internal Revenue Service (IRS) clarified rules regarding how wind projects quality for the PTC — specifying that there is “no fixed minimum amount of work or monetary or percentage threshold” to qualify.
The clarification spurred analysts to suggest 2015 would yield the greatest benefit, creating with it “heightened expectations” for the year. With the tax credit threshold clarified, developers and projects will move ahead — freeing up almost 3 GW of projects that were in the pipeline and creating a larger-still pipeline as developers aim to initiate their projects before the possible end of the PTC.
“Stably-priced wind energy also protects consumers from price spikes for fuel, but that is not accounted for in the highly regulated electricity market because other energy sources get to pass their fuel price increases directly on to consumers,” Goggin said. “Policies like the PTC correct for those market failures to reach a more efficient market outcome.”