Wind's Future Remains Uncertain Despite Credit Renewal

While the wind energy credit was extended thanks to the fiscal cliff deal, don't expect to see a flurry of wind projects built and certainly it won't match last year's production. Much uncertainty remains for this renewable power industry.

Ryan Tracy writes about the uncertainty that the wind industry faces despite seeing the wind Production Tax Credit of 2.2 cents per kilowatt hour extended for 2013 due to the fiscal cliff deal (American Taxpayer Relief Act of 2012). "Wind power faces competition from low-priced natural gas and slow growth in U.S. electricity demand," but the biggest uncertainty is whether the credit will be renewed next year for projects unable to break ground in 2013.

"Wind power is still a small part of U.S. electricity capacity: Through October 2012, wind turbines generated about 3.3 % of the country's electricity. But the industry has grown dramatically in recent years and installed some 12 gigawatts of capacity in 2012, according to preliminary industry estimates." In addition, outside of hydropower and biomass and biofuels, it is the largest source of renewable power in the U.S according to the pie chart by the Institute for Energy Research.

There are some bright spots.

  • "Some wind-farm developers are drawing up plans. Greg Wolf, president of Duke Energy Corp.'s renewable-energy development arm, said in an interview that the nation's largest utility is looking at "hundreds of megawatts" of wind farms that could start construction this year. Boston-based wind-energy developer First Wind said it expects to have projects totaling at least 500 megawatts qualify for the 2013 tax credit."
  • 29 state require that a percentage of electricity generation come from renewable sources.  California legislation requires one-third by 2020 in its Renewables Portfolio Standard.

Not all utility companies support the wind tax credit. "The utility Exelon Corp. broke ranks with fellow wind-power producers by opposing the tax credit last year."

Wind energy remains largely subsidy-driven, with $10.8 billion in grants awarded between 2009 and 2012, according to Ryan. "(T)he latest extension of the tax creadit will cost about $12 billion over 10 years according to congressional estimates."

The real test for the industry may be surviving without the tax credit (see Planetizen: Should Wind and Solar Stand on Their Own?).  If states increase their renewable power requirements, the industry will profit.  And carbon cap and trade programs, like the one enacted in November by California won't hurt.  A carbon tax like exists further north wouldn't be so bad either.

Contributor's note: Wall Street Journal subscriber-only content may be available to non-subscribers until Jan. 23.

Full Story: Wind Industry's Roar May Diminish in 2013



Irvin Dawid's picture

Good news from Denver Business Journal

"Vestas Wind Systems said Wednesday it will ramp up operations — and hire more than 100 people by the end of the first quarter — at its Pueblo towers plant" reports Cathy Proctor.

"Companies throughout the American wind energy industry have laid off workers in the past several months because the federal Wind Production Tax Credit (PTC) was scheduled to lapse at the end of 2012. As part of the congressional “fiscal cliff” deal reached in early January the tax credit was extended for wind farms that start construction by the end of 2013 and are operational by the end of 2014. The tax credit offers $22 for every megawatt hour of energy produced for the wind farms’ first 10 years of operation."

So there you have it, the extension of the credit brings good news to the wind industry and those looking for work in Colorado.

Prepare for the AICP* Exam

Join the thousands of students who have utilized the Planetizen AICP* Exam Preparation Class to prepare for the American Planning Association's AICP* exam.
Starting at $245

Essential Readings in Urban Planning

Planning on taking the AICP* Exam? Register for Planetizen's AICP * Exam Preparation Course to save $25.

City Coasters

Hand-drawn engraved maps of your favorite neighborhoods are divided up across 4 coasters making each one unique.
City Plate table setting

New Arrival! City Plates

City downtown cores printed on gorgeous decorative collectible porcelain plates.