US wind energy on the up, but still lacks long-term stability

August 5, 2011

U.S. wind energy continued to rebound in the second quarter, with 2,151 megawatts (MW) of electrical generating capacity installed in the first half of 2011, versus 1,250 MW during the same time in 2010, up 72 percent.

However, analysts at the American Wind Energy Association (AWEA) cautioned that without stable policy such as an extension of the Production Tax Credit, set to expire in 2012, the industry’s recovery will stall.

Project activity and orders for 2013 and beyond are scant because of the lack of a predictable business environment, causing layoffs and even bankruptcies in American manufacturing plants and the supply chain, said AWEA.

These struggles for U.S. wind manufacturers will only worsen if Congress were to allow the tax credit to expire.

Ironically, due to the Production Tax Credit and market stability over the past five years, domestic content in the U.S. industry reached a record high of 60 percent through 2010, according to a recent Department of Energy report.

“Clearly Congress cannot take for granted all the wind energy manufacturing and construction jobs that have been a bright spot through the recession,” said Denise Bode, CEO of AWEA.

However, she added, “Wind tax credits enjoy broad bipartisan support, and since they’re not spending programs, current projects are safe and prospects for extension of the Production Tax Credit beyond 2012 are good.”

Ahead of schedule

The fast-growing wind sector averaged 3.2 percent of the nation’s electricity over the strong wind months between January and April 2011, according to the Energy Information Administration’s Electric Power Monthly report.

For now, wind energy remains ahead of schedule to generate 20 percent of America’s electricity by 2030, the goal identified by the U.S. Department of Energy (DOE) under the George W. Bush Administration.

“We’re making more clean, homegrown energy, and prices are more affordable, than ever,” Bode said. A report by nationally known energy consumer advocate Mark Cooper, released in May by the Vermont Law School, found that wind energy today is such a good deal that it helps hold down overall prices for electricity long-term. Cooper asserted that an American utility would be irresponsible not to invest in such a fixed-price source of power.

An additional 7,354 MW of new capacity was under construction by July 1, more than at any time since the third quarter of 2008.

Since 2007, wind energy has installed 35 percent of America’s new electrical generating capacity, more than twice coal and nuclear combined.

Made in America

Meanwhile, the comparative stability in U.S. tax policy has helped to steadily increase the level of content that’s made in America in U.S.-installed turbines, from 25 percent just a few years ago to over 50 percent in 2009 and reaching 60 percent domestic content according to a July 2011 DOE report.

“We’re seeing a strong trend toward insourcing, just when so many American industries are outsourcing,” Bode said. “The Production Tax Credit for renewable energy not only produces affordable clean power, it is increasing the American manufacturing base, and the jobs that go with it.”

Other highlights of the second quarter and the U.S. Wind Industry Second Quarter Market Report 2011 that AWEA released yesterday include:

The U.S. industry during the second quarter installed 1,033 megawatts (MW) of electrical generating capacity versus 709 MW during the same period last year, up 46 percent for the same quarter last year.
California installed the most, with 420 MW; then Oregon, 201 MW; Illinois, 150 MW, Utah, 102 MW; and Ohio, 56.5 MW and its first utility-scale wind farm.
Maryland added its second utility-scale project, of 50 MW, taking its wind energy capacity up 71 percent.
Over 2,500 MW of new construction were started during the second quarter, almost three times more new construction than began during the first quarter of the year.
Huge under-construction numbers were reported in numerous states: 845 MW in Oregon; 802 MW in California; 769 MW in Oklahoma; 619 MW in Iowa; 611 MW in Illinois; 501 MW in Colorado; and 492 MW in Texas. “Most regions across the U.S. have more under construction activity today than installed in all of 2010,” said Elizabeth Salerno, AWEA’s Chief Economist and Director of Industry Data Analysis.
Construction began on the first utility-scale wind farm in Nevada.
Adding a 78-MW repowering initiative in California’s Altamont Pass, where some of the industry’s earliest turbines were installed 30 years ago, brings total construction to 7,432 MW in 28 states, including 17 states with more than 100 MW under construction.
Further large-scale construction is ahead in Iowa, where financier Warren Buffett is helping bankroll the installation of 258 turbines in five counties with a combined capacity of 593 MW.
Iowa wind has reached the milestone of generating 20 percent of the state’s electricity from January to April 2011, according to EIA.
The U.S. wind industry now totals 42,432 MW of cumulative wind capacity, led by Texas with more than a fourth of the total. Amid a worsening drought in Texas that is threatening the large amounts of water needed to generate most other sources of electricity, Bode stressed another advantage of wind energy: it uses virtually no water.
Texas is followed by Iowa, California, Minnesota, Illinois, Washington, and Oregon in total installed wind capacity.