Wind Power: Strong Progress Imperiled
December 12, 2012
Over the last dozen years or so, the wind industry has quietly become a pretty big deal in the U.S. Since 2007, wind power has provided 35 percent of all new electric power generation in this country. That means more new wind generation than new coal and nuclear combined, and second only to natural gas.
In 1999, there were only 2,500 megawatts (MW) of wind capacity in the U.S. By the end of 2012, which will be a record year for the industry, we expect over 60,000 MW to be installed in total – a 24-fold increase. Wind now provides enough electricity each year to serve the needs of about 15 million homes and displaces 94 million tons of CO2 emissions each year.
This growth was driven by steady improvements in wind technology and its cost-effectiveness, as well as strong policy support in more than half of our states which now place renewable energy requirements on their electric utilities.
With that enormous growth a new U.S.-based manufacturing industry has emerged. Over 470 factories have opened in the U.S. to serve the need for new wind turbines, manufacturing everything from steel towers to fiberglass blades to giant bolts and generators.
For a growing number of farmers in the American heartland, wind-generated electricity has become a lucrative second crop. In Iowa, for example, where wind provides more than 20 percent of all the electricity generated in the state, landowners are receiving more than $14 million annually for leasing small portions of their land for more than 3,000 wind turbines.
Given this huge growth, how big could wind be in the U.S.? What is the potential for wind power? Today, wind provides less than 4 percent of our nation’s electricity, but a major analysis by the U.S. Department of Energy that was released in 2008 demonstrated conclusively that it is feasible for wind to provide 20 percent of the nation’s electricity by the year 2030. There is certainly more than enough wind resource. DOE also concluded that contrary to common public perception, 20 percent wind can be achieved without the need for energy storage. Despite assertions by some that renewable energy is more expensive than its fossil or nuclear competition, the DOE analysis showed that 20 percent wind would actually save consumers money, in large part because of huge savings in fossil fuel costs. The environmental benefits are obvious – the DOE study showed that 20 percent wind would displace over 80,000 MW of coal, which is a big step toward reducing our global warming emissions.
What are the major barriers to achieving 20 percent wind? There are two.
The long-term strategic constraint is an overloaded electric grid that can’t even meet the needs of today’s electric industry, much less the future challenge of moving huge amounts of wind energy from where the wind is to where most consumers live – that is, from the nation’s heartland to the major urban areas. But we are making progress. The grid is slowly being strengthened, and today we even have examples of wind power generated in Illinois, Kansas and Iowa being transmitted to the Tennessee Valley Authority.
Strengthening the nation’s transmission grid might seem like a huge cost, and it isn’t trivial, but the cost of that investment would be easily recaptured in the reduced electricity bills it would bring to the nation’s consumers by connecting them to relatively low-cost Great Plains wind power.
The other major barrier to 20 percent wind, and the challenge that is bedeviling the wind industry at the moment, is the lack of a stable, consistent, long-term energy policy in this country. There has been an on-again, off-again quality to the nation’s policy support for renewable energy, and this lack of consistency has played havoc with our ability to build a stable wind turbine manufacturing industry in this country. Each time we have stimulated a group of U.S.-based turbine manufacturers, we have pulled the rug out from under them with abrupt changes in policy. We did it in 1986 when we stopped the wind investment tax credit just at the time the U.S. had built the foundation for new renewable energy technologies in California, causing virtually every U.S. based manufacturer to go out of business.
After allowing the manufacturing leadership to pass to Denmark, Germany and Spain, we established a new wind production tax credit (PTC) that took effect in 1994. Slowly but surely, the demand for wind grew in the U.S., and as that market grew, manufacturers from around the world established factories and supply chains to serve the growing need. Now, just at the point where there is lots of momentum behind wind power and tens of thousands of jobs at stake, Congress has been unable to move forward on extending the wind production tax credit beyond its scheduled expiration at the end of 2012. The industry has come to a grinding halt, and thousands of workers have been laid off due to the lack of orders for next year. President Obama has been strongly supportive of an extension and has asked Congress to include such a provision in any fiscal cliff package, but at this moment nothing has been agreed to. The wind industry is painfully reliving history.
Even if an extension takes place in the last few weeks of 2012, enormous damage has already been done to this new industry, and this experience will lead many companies to think twice in the future before they commit millions of dollars to building any additional factories to serve such an unpredictable, uncertain market.
Wind is playing an increasingly important role in our electric power industry, and that is good news for the nation’s environment and economy. But we will never come close to meeting the 20 percent wind objective unless we do a better job of maintaining a stable, consistent energy policy. The first step is extending the wind production tax credit . . . now!
The views expressed in these essays are those of their respective authors and do not necessarily reflect the views of Physicians for Social Responsibility.