|The 99 MW Duke Energy Campbell Hill project in Converse County, Wyo., is one of the many projects that has been spurred by the Production Tax Credit, which was the main topic at WindPower 2012.|
By Lindsay Morris, Associate Editor
Even in the midst of a season of uncertainty for the wind energy industry, over 11,000 people gathered in Atlanta, Ga. in early June for the American Wind Energy Association's (AWEA's) annual WindPower event.
While wind generation represents 35 percent of new generation installed over the last five years in the U.S., that unprecedented growth may soon come to a screeching halt. The Production Tax Credit (PTC) for wind energy, set to expire on Dec. 31, has caused developers to freeze plans going forward. The PTC was the main topic in question throughout the event, discussed by a number of speakers, including political figures and wind industry leaders.
Governors from two states, Arkansas and Kansas, expressed how their states' economies have boomed in part due to the wind industry. "Three billion dollars of investment in wind has occurred in a 12-month timeframe in my state," said Gov. Sam Brownback of Kansas. "The PTC has worked." Gov. Mike Beebe of Arkansas said his state was able to ride out the recession because of new jobs created in the wind industry. "We're all about wind right now in Arkansas." According to the speakers, an unextended PTC could demobilize the industry. Heather Zichal, deputy assistant to President Obama for Energy and Climate Change, said the wind energy industry has never had so much to lose. "If Congress doesn't act, factories will close and tens of thousands of people will lose their jobs."
Denise Bode, CEO of AWEA, said that in a non-election year, the PTC would have already received an extension. However, she remains confident that the tax credit will be extended by the end of the year. "The PTC has the highest level of bi-partisan support than any energy industry, especially in a Congress that's more divided than ever," Bode said.
But many have questioned whether a one-year extension of the tax credit would even be helpful to the industry, since most wind projects take 18 to 24 months to complete from start to finish.
"We don't need the PTC renewed for a year. How can capital decisions be made off something that's only renewed for a year?" Beebe said.
Executives from eight of the largest wind turbine manufacturers agreed that market stability can only be established by longer-term, reliable policy.
"This every 12-month hopscotch doesn't do anything for long-term strategy. We've got to have a playing field that brings some stability," said Duncan Koerbel, interim CEO of Suzlon.
The executives discussed two policy approaches that would encourage the continued expansion of the wind energy industry: a national energy policy, or a two-year extension of the PTC.
"Give us a target; set a policy," Venderby said. "If it expires in three to five years, we can figure out how to compete."
Brownback suggested that a four-year phase-out of the PTC would be ideal. "I think that's a reasonable, projectable time horizon."
Most of the speakers throughout the conference agreed that the PTC will be extended, but it likely won't occur until after the November presidential election. That puts a great deal of pressure on Congress during the lame-duck session, the period between Nov. 7 and Jan. 15 typically focused on a series of high-stakes issues.
Karl Rove, senior advisor and deputy chief of staff to former President George W. Bush, said that even without election-year perceptions hanging overhead, Congress won't be able to accomplish in 70 days what it has put off for nearly a year.
"We're going to have a train wreck," he said about the prospects of dealing with the PTC during the lame-duck session.
Rove said Congress will have to determine which issues get discarded and which will receive a stop-gap measure that kicks certainty farther down the road.
Robert Gibbs, former White House press secretary, said the PTC should be dealt with prior to the lame-duck session. "There's agreement on some things and we ought to clear the plate now."
With or without a PTC extension at the end of this year, executives of the turbine manufacturing companies said they believe wind growth in the U.S. will prevail. Beyond 2012, the market is likely to slow, but the panelists said that won't keep their companies from staying in the U.S, which is currently the No. 2 wind market in the world, behind Germany. All eight companies – Gamesa, GE, Goldwind, Mitsubishi Power Systems, Nordex, Siemens, Suzlon and Vestas – said they would not pull out even if Congress abandoned all renewable energy subsidies.
"We have a commitment to the market here," said Christian Venderby, chief operating officer of Vestas, the largest wind turbine manufacturer in the world.
The wind energy market could be down 80 percent next year, said Duncan Koerbel, interim CEO of Suzlon. "But Suzlon is in this for the longest of the long hauls. If you're going to be in wind, you have to be in North America."
Aside from policy uncertainty, the American wind industry is also faced with the challenge of emerging competition from cheap natural gas. However, gas prices will not stay around $2 forever, panelists said, and wind energy prices will only continue to fall over time.
"We're all investing in new products and innovations to drive down the cost of energy and make it more in parity with other fuels," said Michael Revak, vice president of technical sales and proposals for Siemens.
Some technology advancement the panelists mentioned their companies are exploring include larger rotors, higher towers, improved batteries, the use of compressed air, as well as advancements in areas like forecasting, interconnection and storage.
All eight executives agreed that 2012 will likely see anywhere from 9 to 12 GW of wind power installations, as developers rush to take advantage of the PTC. None of the manufacturers mentioned having seen developers place any turbine orders in the U.S. for 2013.
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