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Wind Power: Becoming a Major Player?

ImageThe US wind energy industry is celebrating one record-breaking year after another.  Wind farms are being installed in the vast American heartland as quickly as the industry can produce turbines.  How fast is wind power likely to grow in the USA over the next few decades? What will it take for wind to eventually provide 20% of the nation’s electricity, as envisioned by President Bush?
By Randall Swisher, Executive , American Wind Energy Association
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Wind power’s current record-breaking performance shows that it could become a power technology of choice for new generation – if a steady national incentive is in place and regulatory challenges are overcome.   The timely extension of the federal production tax credit (PTC) last year made it possible for the industry to plan through to December 2007, when the credit is next scheduled to expire.  As a result, over 2,400 megawatts of new generating equipment were installed in 2005, and that record should be broken in 2006 with more than 3,000 megawatts installed.

This momentum could come to a halt, however, if the federal PTC is not again extended well before it expires on 31 December 2007.   Such an extension should seem easy to secure given rising fuel prices and wind energy’s vast popular appeal. The reality is that a PTC extension needs to be part of a broader bill, such as energy or tax legislation (in part, because the popularity of wind increases the appeal of that package).  That, in turn, is often subject to delays.  Uncertainty is likely to loom for the wind energy industry as 2007 approaches.

But couldn’t the wind energy industry continue to expand without the PTC?  Our view is that an incentive is needed, as much as ever, in order to ‘level the playing field’.  As the free-market Economist likes to remind its readers, the energy sector is one of the most subsidised in the US economy.  The PTC is itself a significant incentive – both valuable and very effective in spurring productivity.  But the cost of the PTC is minimal relative to the vast direct and indirect subsidies for conventional energy sources.

The long-term availability of the PTC and ‘relief’ from its intermittency is the main constraint to wind energy’s growth, but not the only one.   Outdated, discriminatory transmission rules and lack of transmission capacity will also need to be overcome in order for wind power to grow significantly.   Reforms to ensure fair access for all technologies, including new technologies like wind power and other renewables, will benefit consumers and contribute to overall grid reliability.  The American Wind Energy Association (AWEA) is working to promote such reforms at the federal and regional levels.  

In conclusion, the wind energy industry has proved that it can ramp up quickly to meet demand.  Moreover, the drivers behind wind power’s development are strong: vast and inexhaustible resource potential, popular support, proven technology, affordable cost.  Economic, environmental and energy security concerns all point towards the need for more wind power development.  Over time, AWEA believes the market could grow to support new installations of 10,000 megawatts (serving the equivalent of 2.5 million American homes) annually. 

The factor that will determine the rate of this growth is political commitment.  The current record-breaking years demonstrate what can be achieved when the industry is given a minimum of stability and policy certainty.
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