USA - Looming expiration of federal incentive threatens wind power’s new-found growth: AWEA second quarter market report

U.S. wind farms now generate more electricity than any other nation in the world and are on track to expand by over 45% this year, but the expiration of the federal production tax credit (PTC) less than five months from now threatens this spectacular progress, the American Wind Energy Association (AWEA) said today in its second quarter market report.

“The U.S. is now the world’s largest wind energy producer, with wind development sparking job creation and economic opportunity in a troubled economy,” said AWEA Executive Director Randall Swisher. “But the current figures hide a dire reality: the pipeline of investment for 2009 has been on hold for months, with escalating risks and costs for the industry, because of the uncertainty about the production tax credit. At a time when unemployment is at a 4-year high and the economy needs every stimulus it can get, a rapid extension of the credit should be on any economic priority list for Congress.”

The U.S. is now the world leader in wind electricity generation. While Germany still has more generating capacity installed (about 23,000 megawatts), the U.S. is producing more electricity from wind because of its much stronger winds.

Total U.S. installed wind power capacity now stands at 19,549 megawatts (MW). The industry installed 1,194 MW in the second quarter, down from 1,532 MW during the first. This brings the year’s new capacity to 2,725 MW, more than was installed in any year except 2007. More is under construction for completion either by the end of this year or the beginning of next year, depending on when the PTC is extended. Uncertainty regarding the PTC is causing a rush to complete projects by the end of the year, with increased risks and costs for the industry and eventually for customers. Under the best-case scenario for the industry, Congress will move quickly in September to extend the credit and the pressure will be eased for immediate project completion while reopening the pipeline for 2009. Under that scenario, AWEA projects at least 7,500 MW of new capacity to be added in 2008.

AWEA also reports a strong increase in domestic investment in wind turbine and wind turbine component manufacturing facilities over the past year and a half. At least 41 facilities have been announced, opened, or expanded over that period of time. These facilities will create over 9,000 jobs when they are at full capacity. Uncertainty about the PTC threatens that level of investment as well.

“It’s clear that wind power is not only a major technology with which to fight climate change, but also one of the most promising and dynamic economic engines we have today,” said Swisher. “The nation needs an ambitious plan to promote the deployment of wind and other renewable energy technologies—and the urgent first step it must take is to rapidly extend the expiring renewable energy credits, which are the primary incentive that the nation provides for these technologies today.”

The report is available on the AWEA Web site at www.awea.org/publications/reports/2Q08.pdf

AWEA is the national trade association of the U.S. wind energy industry. The association’s membership includes global leaders in wind power development, wind turbine manufacturing, and energy, as well as a broad range of component and service suppliers. More information on wind energy is available at the AWEA web site: www.awea.org.