Commentry to Wind Energy by Rob Gramlich, Interim CEO, American Wind Energy Association: American Wind Power - What’s Happening, What’s Working and What’s Next im Windmesse Newsletter

Along with other sources of renewable energy, we have created an entirely new sector of the international economy.

But today, our industry is facing new challenges presented by a changing economy and business climate. Here in the United States, uncertain tax policies in 2012 inhibited business growth and caused cutbacks and layoffs in existing projects.

The federal renewable energy production tax credit (PTC) has been the primary financial policy for the wind industry since its inception in 1992. The PTC has succeeded in incentivizing an average of $15.5 billion a year in private investment in U.S. wind farms over the past five years. It works by providing a tax credit of 2.2 cents a kilowatt-hour once the electricity is generated, for the first 10 years that a U.S. wind farm is in operation.

Unfortunately, the PTC’s effectiveness has been hampered by a legislative history of extending the PTC mostly in one- and two-year intervals, and even allowing it to expire on occasion. As the Washington Post recently reported (wapo.st/QGSatU), these PTC policies have led to boom and bust cycles for the wind industry over the years:

“During the 1990s and early ’00s, the wind industry grew erratically. Whenever Congress enacted the production tax credit, wind turbines would go up. Whenever Congress allowed the tax credit to expire, as in 1999, 2001 and 2003, the industry would slump.

“That all changed starting around 2004. At that point, Congress stopped allowing the tax credit to expire. Just as significantly, more than 29 states passed local mandates that required electric utilities to get a certain portion of their power from renewable energy. The result? All that policy uncertainty subsided and wind power began booming, as technology improved and costs fell.”

The next chapter in the wind power tax policy history, however, was not as promising.

Although the PTC enjoys broad, bipartisan support among members of Congress and the nation’s Governors, legislation to extend the PTC became subsumed by Washington’s fractious debate over tax policy, the federal budget, and ultimately, the “fiscal cliff.” It wasn’t until the 11^th hour—some might say the 13^th hour, as legislation to avoid the fiscal cliff wasn’t approved until after the Dec. 31 deadline had passed—that a one-year extension of the PTC was written into law for projects that start construction in 2013.

The extension is now reviving business as utilities and project developers begin negotiating new contracts and business in manufacturing and the supply chain is expected to follow. It will allow continued growth of the energy source that installed the most new electrical generating capacity in America last year, with factories or wind farms in all 50 states.

Uncertainty in the business community over federal tax policies had put many projects on hold and hurt local economies. The threat of the PTC’s expiration started a round of layoffs and idled factories. Half the American jobs in wind energy – 37,000 out of 75,000 – and hundreds of U.S. factories in the supply chain would have been at stake had the PTC been allowed to expire, according to a study by Navigant Consulting.

At the American Wind Energy Association (AWEA), the national trade association of America’s wind industry, we worked with member companies, workers, consumer groups and others to tell lawmakers about the importance of the PTC.

In the closing days of this year's "lame duck" session of Congress, America's wind energy workers posted videos to tell their stories of working in the new industry. Throughout the year, companies that belong to AWEA sent delegations to Capitol Hill, invited Members of Congress on tours of wind farms and factories, and delivered hundreds of thousands of letters from constituents.

Beyond tax policy, AWEA campaigns for policies that will enable the wind industry to contribute to US economic growth, improve energy security and slow climate change. Increased wind power production will further strengthen our nation’s energy security and help prevent future price shocks.

With 2,000 member companies, including global leaders in wind power and energy development, wind turbine manufacturing, component and service suppliers AWEA is the voice of wind energy in the U.S., promoting renewable energy to power a cleaner, stronger America.

2012 will likely turn out to be a record year for new wind installations in the U.S., and early reports indicate that wind energy installed more new capacity than any other fuel source.

The national image of wind power is changing. In fact, when wind energy came up in the second presidential debate, both candidates mentioned it three times and all were positive.

How do we deliver on the promise of wind power, and make the most of the opportunity we have to shape the national debate?

In the federal legislative arena, we are working to ensure energy and tax policy provides for economic parity, encourages a balanced energy portfolio and recognizes environmental benefits.

In the states, we are standing up to efforts that would weaken or even roll back state Renewable Portfolio Standards. These policies have broad public support because they have been so effective in driving demand for lower-impact ways of making our energy.

Studies in state after state show a strong RPS also reduces consumers’ electric bills. They encourage utilities to sign long-term Power Purchase Agreements that lock in record-low prices for wind and other forms of renewable energy, based on recent technological advances. And they hold down the volatile fuel prices of other forms of energy.

In the regulatory space, we keep our focus on decisions that will set long-standing precedents, and gear our energies around making sure the long-term solutions are optimal. We must also remove regulatory barriers that unnecessarily slow and add costs to expansion of wind energy.

By its very nature, the wind industry is a modern, forward-thinking sector that is contributing to a bright future for America. Everyone who has been involved in policy-making on the national level has had to deal with what seems like a perpetual state of electoral gridlock. And yet, our members believe that if there is a moment for us to make progress and put in motion the actions essential to re-start and re-energize this industry, we’re in that moment now.

Wind power is good for America. Wind is clean, affordable, abundant and homegrown. The wind that turns the turbine blades costs nothing, locking in the long-term cost of electricity and protecting families and businesses from unpredictable price spikes. Steady and cost-effective energy sources are critical to the growth and development of American business in the long-term.

We also need steady, predictable, and sensible federal policies that encourage wind power production, and enable wind to continue to play an essential role in strengthening the U.S. economy.

We are working closely with members of Congress to address their concerns in wind energy and to find ways to create more American jobs. Meanwhile, we are thankful that Congress extended the PTC for a year and we need to focus on building more wind projects, maintaining our manufacturing sector, and regaining the industry’s momentum that was put on hold during the last year.

Meanwhile the U.S. Department of Energy has identified transmission limitations as a principal obstacle to realizing the economic, environmental, and energy-security benefits of obtaining 20% of our electricity from wind power. Transmission is currently being built in the U.S. that would connect approximately 50,000 MW of additional wind energy capacity. An expanded grid will allow plentiful domestic sources of renewable energy to be put to use powering our homes and even our vehicles, reducing our fossil-fuel dependence as well as energy prices.

Resolving wind power project siting issues is an important part of expanding wind energy development. The principles applied to wind energy siting issues must promote efficient, fair and open permitting processes at the federal, state and local levels. Project siting guidelines must address wildlife and habitat issues, military and non-military infrastructure, and community concerns. Given all the potential benefits of wind energy development, the wind industry's impacts should be considered in context with other forms of energy production and treated accordingly during the policy-making process. 

These are exciting times for the wind industry, and times of great challenge as well. All of us in the energy sector are adapting to changes in the economy, in the political establishment and in the regulatory environment, and the experience and dedication we share will serve us well in the coming years. We are not only building new models for business success. We are helping to shape a new paradigm for meeting America’s energy needs. The best days for American wind power are still ahead.