Long known for its boom or bust tendencies, the U.S. wind energy industry outdid itself in 2013. Capacity additions fell off a cliff, dropping more than 90 percent from 2012 and hitting their lowest level in a decade – but by the end of the year, new projects were under construction at a record-breaking clip.
What comes next? As the American Wind Energy Association’s just-released 2013 annual market report makes clear, the industry is once again looking for “policy stability” – which is to say, an extension of the production tax credit and its companion, the investment tax credit.
“The lows … tell as sobering a story as the highs tell a celebratory message,” AWEA CEO Tom Kiernan says in the report, which was provided to media on the condition it not be redistributed. “They convey a crystal-clear message: The PTC and ITC must be extended, and wind energy policy just be made stable.”
AWEA calls the PTC, valued at 2.3 cents per kilowatt-hour, “wind’s primary policy driver,” and the industry’s installation ups and downs track with its fickle fate.
Up: The looming expiration of the tax credit drove massive installations in 2012, a record 13,131 MW.
Down: That same circumstance left wind’s project pipeline empty entering 2013, explaining why just 1,087 MW of new capacity went online during the year.
Up: The one-year extension that Congress passed at the beginning of 2013 made the PTC available to projects merely under construction by the end of year (instead of in service), leading to a surge in new activity late in the year, which ended “with more than 12,000 MW across 100 wind projects in the process of getting built,” according to the market report.
In an interview, AWEA senior policy analyst Emily Williams said the industry would love to work with Congress on a long-term policy solution. But with comprehensive tax reform appearing unlikely anytime soon, the immediate goal is to see a retroactive two-year PTC extension – endorsed early this month by the Senate Finance Committee – put in place.
That, along with the declining cost of wind – down 43 percent between 2008 and 2012, the industry says – would likely ensure a robust next several years for wind energy.
As it is, Williams said the projects that qualified for the PTC in 2013 should lead to growth in installations this year and then again in 2015 “similar to what we saw in 2011,” when 6,820 MW came online.
The U.S. entered 2014 with 61,110 MW of wind energy, second to China’s 91,424 MW and ahead of Germany’s 34,250 MW. About 90 percent of the U.S. capacity was added in the past nine years, and AWEA notes in the new report that wind energy’s contribution to U.S. electrical generation rose from 0.3 percent in 2003 to 4.1 percent in 2013, according to U.S. Energy Information Administration data.
In the report, AWEA argues that all that wind energy is trimming carbon emissions by 95.6 million tons annually, equal to 4.4 percent of U.S. power sector emissions, “while avoiding the consumption of over 36 billion gallons of water each year.”
