New Climate Report Names Current Decade As Warmest On Record

The leading U.S. wind energy industry group has to be creative when it comes to ringing alarm bells for a renewal of the Production Tax Credit. After all, it’s something they do every couple of years. Now, with the PTC already a year out of date and a presumably less renewables-friendly Congress waiting in the wings, there’s greater urgency than ever to the American Wind Energy Association’s efforts.

So AWEA on Tuesday used China as a foil to demonstrate the efficacy of the PTC and build an argument for a lame duck-session renewal. The group presented analysis showing that the U.S., despite having 50 percent less installed wind energy capacity than world-leader China, produced 20 percent more energy from its wind fleet. That makes the U.S. the world leader in wind energy production.

No small thanks to the PTC, according to AWEA.

“What gets rewarded gets done,” EDF Renewable Energy Vice Chairman James Walker, a past president of the AWEA who did the analysis, said in a telephone press conference. Walker added that because of the PTC, in the U.S. “every step of the supply and development chain is motivated by long-term energy production delivered to the customer.”

According to the Global Wind Energy Council, China had 91,424 megawatts of installed wind energy capacity as of the end of 2013, the U.S. 61,091. But AWEA said the U.S. produced 168 billion kilowatt-hours of electricity from wind in 2013, while China produced 136 billion kWh. China’s installation-driven industry has long struggled to integrate new wind capacity onto a transmission-constrained grid, although curtailment rates have reportedly been falling more recently.

“The Production Tax Credit is a successful tax policy because it is based on production,” AWEA Executive Director Tom Kiernan said. “This proves out the effectiveness of the Production Tax Credit.”

The PTC, now worth 2.3 cents per kilowatt-hour of energy produced in the first 10 years of a wind farm’s operation, was first enacted in 1992 and became a big driver for growth in the U.S. wind industry in the 2000s, when state policies began to align with the federal incentive. The credit has typically run for two years and periodic failures to renew it promptly have created boom-and-bust cycles for the industry: With an expiration looming at the end of 2012, the industry feverishly installed 13,124 megawatts; that left the cupboard bare of projects for 2013, when capacity additions barely topped 1,000 megawatts.

The PTC was extended for 2013, on New Year’s Day that year, for just one year – but with a twist. The extension made facilities under construction before Jan. 1, 2014, eligible for the credit, whereas the version of the law that expired at the end of 2012 had required turbines to be operating by the deadline.

That led to a lot of projects getting going in 2013, and AWEA says more than 13,000 megawatts of capacity is under construction and should go into service in the next year or so. To inject new projects into the development pipeline, AWEA is seeking a retroactive PTC extension that would run through the end of next year, something Senate Finance Chair Ron Wyden (D-Oregon) included in a package of “tax extenders” earlier this year but that went nowhere in the gridlocked Congress.

Senator Mitch McConnell (R-KY) Holds A News Conference Day After His Midterm Election Victory

Senate Minority Leader U.S. Sen. Mitch McConnell (R-KY) answers questions during a press conference at the University of Louisville November 5, 2014 in Louisville, Kentucky. McConnell discussed his plans for governing the U.S. Senate if elected to the Senate Majority Leader position during the press conference.

The PTC hasn’t been a strictly partisan issue – many Republicans, particularly from wind states like Iowa, have supported it – but it does have stronger backing among Democrats, who of course will be less plentiful in the new Congress.

In arguing for continuing support, the wind industry notes that its product – electricity produced from spinning turbines – has become ever more competitive in the marketplace. The AWEA recently heralded a Lazard report that said the cost of producing wind energy fell by nearly 60 percent between 2008 and 2013. But the group said, too, that “while projects located at some of the best wind resources in the country are now cost-competitive … this is still not the case in most regions.” And the PTC, AWEA added, “helps correct for flaws in our electricity market design that do not value wind’s benefits for protecting the environment and consumers.”

An analysis of the PTC and its impact on the U.S. wind industry by the National Renewable Energy Laboratory earlier this year [PDF] found that with state renewable energy targets largely met and natural gas prices expected to remain low, “modeling results indicate that future wind deployment will be relatively low unless additional incentives are provided that result in wind being cost competitive with existing gas-fired generation.”

One possible new driver for wind development could be proposed Environmental Protection Agency rules for power plants, which would compel states to reduce carbon emissions from power generation.

A U.S. Department of Energy report [PDF] released in August noted that “although the lack of long-term federal incentives for wind energy has been a drag on the industry, the prospective impacts of more-stringent EPA environmental regulations on fossil plant retirements and energy costs may create new markets for wind energy.”

But likely new majority leader Mitch McConnell (R-Kentucky) and many fellow Republicans are vowing to stop those EPA regulations – making a PTC extension even more pressing for the industry.