U.S. Wind Energy Industry Confronts Squalls

Wind energy in the United States faces strong cross-currents—some blowing in from overseas, and others being stirred up right at home.

The nation that comfortably led the world in wind power (in both installed capacity and growth) as recently as three years ago saw a 17 percent increase in wind capacity to nearly 47,000 megawatts (MW) in 2011, the American Wind Energy Association said today.

While the 6,800 MW in new installations marked a slight increase in growth compared to 2010 (5,100 MW, or a 16 percent increase) it was nowhere near the 40 percent to 50 percent annual growth rate the industry saw in the United States from 2007 through 2009.

Still, “American wind power is really at the heart of an American success story,” said AWEA CEO Denise Bode. “2011 was another year of double-digit growth, leading to America’s fastest growing source of made in America jobs … we’re well on our way to providing 20 percent of America’s electricity by the year 2030.”

The United States now lags significantly behind China, which cemented its stronghold on the No. 1 slot in wind energy in 2011 with a 40 percent increase in capacity to more than 62,000 MW, according to the Global Wind Energy Council (GWEC). China added nearly three times the wind capacity that the United States did last year.

“Globally, 2011 saw the strongest year in history in terms of new wind power capacity,” according to the AWEA report. “An additional 41,236 MW of wind power were installed around the world, for a growth rate of 21 percent.” (See the photo gallery above for the world’s top countries for wind installations from 2010-11, according to the GWEC.)

So what’s holding the U.S. back?

One issue is competition within the energy industry. Although wind energy accounts for more than 35 percent of all new generating capacity in the United States over the past four years — it faces stiff competition from cheap natural gas.

“Clearly the wind industry is becoming more and more competitive as an industry,” Bode said. “In terms of prices, low natural gas prices have made us leaner and meaner.”

But the industry faces another major problem: skittishness in Congress over renewing the U.S. production tax credit (PTC), which provides an income tax credit of 2.2 cents per kilowatt hour for the production of wind power — and is set to expire at the end of this year.

The AWEA is pushing hard for its renewal, saying with the credit in place, the wind industry has been able to lower the cost of wind power by more than 90 percent and has helped put people back to work.

Historically, annual wind installation has dropped significantly when the PTC has been allowed to expire.

“American wind power is creating more than 100,000 jobs” over several years, said Bode. “If Congress allows the Production Tax Credit to expire, studies have shown that the jobs will be cut almost in half.”

But tax credit extension is unlikely to come before the November elections. The Chicago Tribune examined in February how by then it will be too late to avoid extensive layoffs and halted projects.

“With the threat of the PTC’s expiration, wind project developers are not making plans in the [United States] and American manufacturers are not receiving orders. Job layoffs have started already,” according to the AWEA.

The AWEA argues that extending the PTC would allow the wind industry to create 500,000 jobs by 2030. Iowa, Texas and Illinois were the states with the most wind jobs last year, with 6,000 to 7,000 in each state.

“Right now for 2013 there are no projects scheduled,” said the AWEA’s chief economist, Elizabeth Salerno. “Simply because of the uncertainty around the PTC, that one factor has stunted growth.”

Currently, though, more than 8,300 MW of wind energy is under construction in separate projects spanning 31 states and Puerto Rico, according to the AWEA.

Below are the top 10 states for wind generation as a percentage of their energy portfolio in 2011:

1.       South Dakota: 22%

2.       Iowa: 19%

3.       North Dakota: 15%

4.       Minnesota: 13%

5.       Wyoming: 10%

6.       Colorado: 9%

7.       Kansas: 8%

8.       Oregon: 8%

9.       Idaho: 8%

10.     Oklahoma: 7%