Environmental Law

Wind Installations Up, Industry Group Says Subsidies Needed to Sustain Progress

By Dennis Pfaff and Kevin Livingston, Editors

Wind power developers in the United States built new installations at a fast rate during the first quarter of 2008, according to an industry group. But the American Wind Energy Association, which issued the report, also warned that the boom could go bust if Congress doesn't move to renew tax credits.

The association documented installations of 1,400 megawatts of new capacity, or about $3 billion worth, in its quarterly market report (see press statement here; text of report here). In its statement, the group said the industry was working at a "breakneck pace." The new installations were enough to serve 400,000 homes, according to the group. However, executive director, Randall Swisher, issued some caveats:

"But if Congress does not act quickly, this momentum could be derailed at the worst possible time for the economy, placing 76,000 jobs and over $11.5 billion in investment at risk. While 2008 is shaping up to be another great year, we could see a very different story in 2009 as uncertainty looms over investment in wind power projects and manufacturing due to continuing delay in extending the production tax credit (PTC).”

The tax credit for the production of energy from renewable sources is the primary federal incentive program for wind power, the association said in its public statement. The credit expires at the end of the year, along with other federal incentives for alternative energy.  

Under intense lobbying that has involved not only the renewables industry but also environmental groups and big energy companies and other businesses, both the Senate and the House have approved their own versions of extensions (see Climate Law Update stories here, here, here and here). So far, however, no final action has been taken and the future of the incentives remains cloudy.

The tax credit has lapsed three times previously, the wind association noted, and each time installations have dropped by as much as 93 percent from the year before.

That's not to say there isn't some skepticism about the need for the incentives. The Wall Street Journal's Environmental Capital blog recently noted the boom in installations and paired that with the industry's call for continued subsidies, suggesting it was a tough sell (see full posting here):

"But when consumers are already being battered by higher prices for gasoline (and electricity), and your industry is thriving, how easy is it to keep pleading for more help?"

The wind association's report showed that some of the biggest new projects continued to be built in Texas, where more than half the new capacity was installed, including a 209-megawatt installation developed by E.On Climate & Renewables, with turbines built by Mitsubishi. Large numbers of turbines were built for other projects by GE Energy , Vestas and Suzlon and located in states including California, Iowa, Kansas, Missouri, Montana and Oregon.

Overall, the association counted about 25,000 turbines operating in the country, with a capacity of 18,303 megawatts.

In addition, the association's press statement said that new wind power facilities made up nearly 35 percent of the entire new generating capacity in the United States last year. It also found that by the end of 2008, about half of the components going into new U.S. projects would be domestically produced, another point it attributed to the existence of the federal incentives:

"Prior to 2005, AWEA estimates that less than a third of components were manufactured domestically. But the relatively stable availability of the PTC since August 2005 has allowed U.S.-based supply chain providers to begin establishing a much stronger foundation of domestic manufacturing for turbine components, which range from towers and blades to gearboxes, bearings, and electrical and electronic components."

(Photo: Wind farm in Kansas, courtesy U.S. Department of Energy)

Full post as published by Climate Law Update on May 08, 2008 (boomark / email).