It has been a big week in the spotlight for wind energy. DOE released two reports showing that not only did the U.S. wind energy industry continue growing at an impressive rate in 2014, but that wind energy prices are continuing to drop and are now at their lowest level ever. The reports underscore the role wind will continue to play in a rapidly approaching clean energy future and the need for strong federal policy to support the industry.
One report released Monday by DOE’s Lawrence Berkeley National Laboratory (LBNL) showed that new utility-scale wind turbines were installed in 19 states last year, adding 4,854 megawatts (MW) of new capacity. That is a huge rebound over 2013, when not quite 1,100 MW were built.
A second report from DOE’s Pacific Northwest National Laboratory (PNNL) updates the distributed wind energy sector, which, unlike traditional, centralized wind-power plants, is made up of installations that supply power directly to the local grid near homes, farms, businesses and communities. Distributed wind is particularly beneficial to rural areas.
Construction in 2014 as detailed in the LBNL analysis, the 2014 Wind Technologies Market Report, now brings the total installed wind capacity in the United States to 66 gigawatts (GW), enough to power 17.5 million homes. Wind energy is now meeting nearly 5 percent of end-use electricity demand in the country. And while that wind energy capacity ranks this country second in the world, the United States was actually the global leader in total wind energy production last year.
A critical finding from the LBNL report is that the growth (the DOE says another 13 GW is under construction) is driving wind energy prices to an all-time low – the wholesale price is about 2.35 cents per kilowatt hour if obtained through power purchasing agreements (PPA) bought by utilities or businesses for long-term supplies – making them competitive with wholesale power prices of traditional power sources across many areas of the United States.
The economic benefits are also demonstrated by the LBNL report, which shows the U.S. wind industry has had a ripple effect on the American economy, supporting 73,000 jobs related to development, siting, manufacturing, transportation and other industries ‑ an increase of 22,500 jobs from 2013 to 2014.
Meanwhile, the PNNL study, the 2014 Distributed Wind Market Report, also shows a surge in wind development. Last year, 23 states added 63.6 MW of capacity from new distributed wind systems, which use small and mid-size wind turbines, defined as up through 100 kilowatts (kW) and from 101 kW to 1 MW, respectively. The addition of nearly 1,700 units through $170 million in investment brought cumulative installed capacity from distributed applications to more than 906 MW, enough to power more than 168,000 average American homes. That capacity comes from roughly 74,000 turbines installed across all 50 states, Puerto Rico and the U.S. Virgin Islands.
It’s important also to note that America’s distributed wind energy industry supports a growing domestic industrial base. U.S.-based small wind turbine manufacturers claimed another strong year of exports to countries across the globe, accounting for nearly 80 percent of their sales.
What’s particularly rewarding about these DOE reports is that they underscore the role of wind energy in helping states meet their carbon reduction targets laid out in the Clean Power Plan (CPP). The Obama administration issued the CPP earlier this month to address emissions from existing power plants. The plan calls for significantly greater use of renewable energy, including no-carbon wind and solar, to replace high-emission coal. The resurging growth rate of the wind industry underscored particularly by the LBNL study (it showed total wind capacity jumped more than 8 percent) demonstrates the sector is meeting the challenge.
But as Energy Secretary Ernest Moniz pointed out in a statement on the DOE findings, that growth must be sustained through “continued investments and the help of stable policies” that will allow wind power to “keep playing a major role in creating jobs and shaping America’s clean energy future.”
Critical among those policies is the federal production tax credit (PTC), a 2.3-cent-per-kilowatt-hour credit – or an alternative 30 percent investment tax credit ‑ for new projects that generate renewable electricity from wind (as well as geothermal, biomass, landfill gas and ocean energy projects). The Senate Finance Committee recently approved legislation that would extend the PTC for two years, through 2016. Rep. Paul Ryan (R-WI), the chairman of the House Ways and Means Committee, says he wants to pass an extension of the tax credits to avoid a reoccurrence of last December when Congress approved an extension, but only through the end of the year, a move that allowed it to expire two weeks after it was adopted.
The importance of the wind industry in meeting this nation’s energy and climate change needs requires Congress to move quickly and with certainty. Lawmakers should end the decade-long, on-again, off-again treatment of these important incentives. The boom-and-bust cycle created by lawmakers destabilizes investments in the renewable energy sectors. Production tax credits not only help keep billions of dollars of assets in rural America in play, they also generate sizable savings by reducing the need for expensive ‑ and often polluting ‑ conventional power and power plants.