US Wind Industry Continues Rebound in Q2, But Tax Credit Extension is Pivotal

US wind energy continued to rebound in the second quarter, but the American Wind Energy Association (AWEA) cautions that without stable policies such as an extension of the Production Tax Credit (set to expire in 2012), the industry’s recovery will stall.

The US saw 2,151 megawatts (MW) of wind capacity installed in the first half of 2011 versus 1,250 MW during the same period in 2010, a rise of 72%.

But project activity and orders for 2013 and beyond are scant, because of the lack of a predictable business environment, causing layoffs and even bankruptcies in American manufacturing plants and the supply chain, AWEA says.

These struggles for U.S. wind manufacturers will only worsen if Congress allows the tax credit to expire, as has happened in the past.

Ironically, due to the Production Tax Credit and market stability over the past five years, domestic produced wind products in the U.S. industry reached a record high of 60% through 2010, according to a recent Department of Energy (DOE) report.

"Clearly Congress cannot take for granted all the wind energy manufacturing and construction jobs that have been a bright spot through the recession," says Denise Bode, CEO of AWEA.

However, she adds, "Wind tax credits enjoy broad bipartisan support, and since they’re not spending programs, current projects are safe and prospects for extension of the Production Tax Credit beyond 2012 are good."

Wind Sector Is Growing Fast

Wind supplied an average of 3.2% of US electricity during strong wind months between January and April 2011, according to the Energy Information Administration’s Electric Power Monthly report.

For now, the industry is ahead of schedule to generate 20% of America’s electricity by 2030, the goal identified by the DOE (DOE) under the George W. Bush Administration.

"We’re making more clean, homegrown energy, and prices are more affordable, than ever," Bode says. A report by nationally known energy consumer advocate Mark Cooper, released in May by the Vermont Law School, found that wind energy today is such a good deal that it helps hold down overall prices for electricity long-term. Cooper asserts that an American utility would be irresponsible not to invest in such a fixed-price source of power.

As of July 1, an additional 7,354 MW of new capacity is under construction, more than at any time since the third quarter of 2008, when the recession began.

Since 2007, 35% of US new electrical generating capacity has been wind, more than twice coal and nuclear combined.

Domestic Manufacturing Is Up

Meanwhile, the comparative stability in U.S. tax policy has helped to steadily increase the level of products that’s made in America, from 25% just a few years ago, to over 50% in 2009, and reaching 60% domestic content according to a July 2011 DOE report.

"We’re seeing a strong trend toward insourcing, just when so many American industries are outsourcing," Bode says. "The Production Tax Credit for renewable energy not only produces affordable clean power, it is increasing the American manufacturing base, and the jobs that go with it."

Other highlights of the second quarter include:

  • 1,033 megawatts (MW) installed vs. 709 MW during the same period last year, up 46%.
  • California installed the most, with 420 MW; then Oregon (201 MW); Illinois (150 MW), Utah (102 MW); and Ohio, (56.5 MW) with its first utility-scale wind farm.
  • Over 2,500 MW of new construction started, almost triple of the first quarter.
  • Huge under-construction numbers were reported in numerous states: Oregon (845 MW); California (802 MW); Oklahoma (769 MW); Iowa (619 MW); Illinois (611 MW); Colorado (501 MW); and Texas (492 MW). "Most regions across the U.S. have more under construction activity today than installed in all of 2010," says Elizabeth Salerno, AWEA’s Chief Economist and Director of Industry Data Analysis.
  • Construction began on the first utility-scale wind farm in Nevada.
  • Further large-scale construction is ahead in Iowa, where financier Warren Buffett is helping bankroll the installation of 258 turbines in five counties with a combined capacity of 593 MW.
  • Iowa wind has reached the milestone of generating 20% of the state’s electricity from January to April 2011, according to EIA.

The U.S. wind industry now totals 42,432 MW of cumulative wind capacity, led by Texas, which has over 25% of that total.

The worsening drought in Texas that’s threatening the large amounts of water needed to generate most other sources of electricity, highlights another advantage of wind energy: it uses virtually no water.

Here’s the second quarter report:

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