Wind's Future Remains Uncertain Despite Credit Renewal

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.

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