June 15, 2008

Global Monitor (June 2008)

PTC powers wind power industry

With the fate of a key federal incentive in the balance, the U.S. wind energy industry continued new installations at a breakneck pace in the first quarter of 2008. The American Wind Energy Association (AWEA) said in its quarterly report that 1,400 MW, or approximately $3 billion worth, of new generating capacity was put in place during the first quarter.

These figures, coupled with investment in 17 new manufacturing facilities over the past year and a quarter, show that America’s wind industry can “deliver the goods,” AWEA Executive Director Randall Swisher said. “But if Congress does not act quickly, this momentum could be derailed at the worst possible time for the economy, placing 76,000 jobs and over $11.5 billion in investment at risk,” he said.

Swisher warned that 2009 could be a different story due to looming uncertainties over investment in wind power projects and manufacturing that could result from delays in production tax credit (PTC) extensions. The PTC—the primary federal incentive for wind power and other renewables—expires at the end of this year. At previous times when the credit has lapsed (1999, 2001, and 2003), wind power installations have dropped by as much as 93% in the following year (Figure 5).

5. Wind production woes. When Congress has failed to extend the production tax credit, wind capacity installation decreases of as much as 93% have resulted in the following, “expired PTC” year. Source: AWEA

The DOE last month concluded from a technical feasibility report that up to 20% of the nation’s total electricity needs could be supplied by wind power by 2030. The analyses surmised that reaching 20% wind energy would require enhanced transmission infrastructure, streamlined siting and permitting regimes, improved reliability and operability of wind systems, and increased U.S. wind manufacturing capacity. The report stressed that annual wind installations would need to increase to more than threefold, requiring the number of annual turbine installations to increase from approximately 2,000 in 2006 to almost 7,000 in 2017.

In the first quarter of 2008, 10 states had new installed wind power facilities that would bring total U.S. wind power capacity to over 18,000 MW, AWEA said. Over 4,000 MW of projects are under construction nationwide.

AWEA also reported an increase in the share of U.S.-made wind turbine components—from less than 30% to approximately 50% in three years. Prior to 2005, AWEA estimates that less than a third of components were manufactured domestically. But the relatively stable availability of the PTC since August 2005 has allowed U.S.-based supply chain providers to begin establishing a much stronger foundation of domestic manufacturing for turbine components, which range from towers and blades to gearboxes, bearings, and electrical and electronic components. AWEA estimates that, by the end of 2008, approximately half of turbine components for turbines installed in the U.S. will be produced domestically. In 2007 and early 2008, at least 17 manufacturing facilities have been brought on-line or expanded in the U.S., creating more than 4,000 jobs and $500 million in manufacturing investment.

Renewing Greensburg

A year after Greensburg, Kansas, was devastated by a tornado, the city is being rebuilt with an emphasis on energy efficiency and 100% renewable energy—particularly wind energy—with support from the DOE. The city of 1,400 residents in the rural Midwest could become a model for North American sustainability.

When Greensburg contacted the DOE for assistance, the agency sent a team of experts from its National Renewable Energy Laboratory (NREL) to conduct studies, develop renewable energy and energy-efficient business strategies, and assemble financing and ownership options to produce or procure renewable energy technologies. The DOE opened an office in Greensburg and helped the city develop and pass a resolution that all large city buildings achieve LEED Platinum certification, the highest green building rating available under the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system. Greensburg is the first city in the U.S. to pass such a strict green building requirement.

The DOE has invested $1.25 million in its assistance to Greensburg and is helping the city to design energy-efficient buildings and power the entire town with renewable energy (Figure 6). As Kansas has the third-highest potential of any state for wind energy, Greensburg has decided to develop a 3- to 4-MW wind energy system, which is expected to produce enough energy over the course of a year to equal the city’s electricity needs. The community will be connected to the grid during the times that wind does not blow sufficiently, and the system will include biodiesel-powered generators for renewable emergency power backup. During the current fiscal year, the DOE will provide Greensburg with a minimum of $500,000 in additional funding for energy-efficient buildings and wind generation technical support.

6. A green burg. When BNIM Architects designed this new school for Greensburg, Kansas, the National Renewable Energy Laboratory provided technical advice about the use of solar electric systems, day-lighting, and other energy-efficiency and renewable features. Courtesy: BNIM Architects