Environmental Law

Wind Hits a Milestone -- But Big Speed Bumps Loom

By Dennis Pfaff and Kevin Livingston, Editors

The wind power industry took a moment the other day to note a milestone in the energy source's development in the United States, and to issue a familiar warning.

First, the milestone: Wind capacity has for the first time exceeded 20,000 megawatts, according to the American Wind Energy Association. In a statement, the trade group said that meant the country had in just two years achieved what had previously taken two decades. The first 10,000 MW of capacity was completed only in mid-2006 -- and in 1985 that figure was only 1,000 MW.

The new figure, according to the latest estimate: 20,152 MW.

The progress means that the installations are "well ahead of the curve" for meeting the U.S. Department of Energy's projections that wind could produce 20 percent of the nation's electric power by 2030, the organization's executive director Randall Swisher said in the statement.

But Swisher repeated an oft-heard warning, and one that seems to get louder as the year goes by -- the industry's momentum depends on a renewal of federal tax incentives which expire at the end of 2008. In wind's case, that is a "production tax credit," equal to about 2 cents per kilowatt hour. That, and other incentives for solar and other renewable energy, has been hung up in Congress for months. Swisher urged lawmakers to act quickly: 

“However, the looming expiration of the federal renewable energy production tax credit (PTC) less than four months from now threatens this spectacular progress. The PTC has been a critical factor in wind’s very rapid growth as a part of the nation’s power portfolio.”       

The cautionary note was echoed by the primary authors of a seminal energy department report issued earlier this year, and described in some detail by Climate Law Update. In a recent article in which they highlighted their findings, the researchers noted numerous factors supporting the industry's growth, including the rising costs of fossil fuel generation, the increasing possibility of carbon regulation and the "growing chorus" of states enacting policies to encourage wind power. However, they also hit this down beat:

"If the PTC is not extended, however, 2009 is likely to be a difficult year of industry retrenchment. The drivers noted above should be able to underpin some wind capacity additions even in the absence of the PTC, and some developers may continue to build under the assumption that the PTC will be extended and apply retroactively. Nonetheless, most developers are expected to ‘wait it out,’ restarting construction activity only once the fate of the PTC is clear."

California utility regulators also recently ominously noted the uncertainty over the future of the tax credits, warning that their possible expiration poses the biggest risk to the state meeting its aggressive renewables portfolio standards. 

Pointedly, the wind association's announcement was made during the just-concluded Republican National Convention, at which the party formally nominated Arizona Sen. John McCain as its candidate for president. McCain, as has been reported recently, has not been voting for the renewable tax credit extensions, in contrast to his Democratic opponent, Illinois Sen. Barack Obama.

As it has before, the trade group noted that the U.S. is now the world leader in wind generation, putting it ahead even of Germany, which actually has more capacity. However, American farms produce more power because of stronger winds. In that previous report, issued just about a month ago, the association said the U.S. wind capacity at that time was 19,549 MW. Even at the higher figure, the group noted that wind provides only about 1.5 percent of the country's electricity.

In its newest statement, the wind group said it expected more than 7,500 MW of new wind capacity would be added in 2008, expanding the fleet by a whopping 45 percent and bringing total capacity to about 24,300 MW.

The new information comes on the heels of other assessments predicting significant growth in the demand for wind turbine components. 

--Dennis Pfaff of Thelen   

Full post as published by Climate Law Update on September 05, 2008 (boomark / email).