United States

United States

Clean energy standard fuels hope for US wind power

UNITED STATES: The President outlined ambitious plans for clean energy in his State of the Union address, but proposals still need to be finalised.

US President Barack Obama's push for a broad clean-energy standard (CES) may be the wind power sector's best hope for a policy that will drive long-term demand, according to wind industry players. With the details of the proposal still to be finalised, however, it is far from clear just how strong that market might be.

Obama used his State of the Union address on January 25 to propose a goal of generating 80% of the nation's electricity from wind, solar, nuclear, natural gas and clean coal by 2035. Both Obama and the country's wind industry had been pushing for a mandate more narrowly focused on renewable-energy technologies, but after the Republicans made major gains in November's mid-term elections, the idea is widely viewed as a non-starter.

Bringing other technologies into the fold could be the wind sector's best chance to get supportive policy in place at the federal level, says Kevin Walsh, managing director in charge of renewables at GE Energy Financial Services.

Patrick Woodson, chief development officer for E.on Climate and Renewables North American, agrees. He believes industry advocates who may still be holding out hope for a strong renewables-only target need to "recalibrate" their expectations and focus on policy that is attainable in the current political environment. "We like the clean energy standard quite a bit. We think it offers the most optimistic vehicle to get something done," he says.

The White House says the US now gets about 40% of its electricity from sources it considers clean. Obama's proposal would double that. But, says Keith Martin, a Washington-based partner in law firm Chadbourne & Parke, it also aims to "promote everything except dirty coal". The details of how policy is implemented will determine how effectively it drives deployment of wind over competing sources.

"I think for wind it will be an interesting thing to follow. We have grown predominantly because of the state renewable portfolio standards and so we've gotten used to competing against other renewables," says Randolph Mann, vice-president of wind development for Edison Mission Energy. "But when you open up the tent to a larger set of technologies, I think it will change the terms of competition."

Woodson says E.ON would like to see a separate purchase obligation for renewable energy technologies carved out of the overall target. The size and timing of interim targets leading up to 2035 will also have an impact on the market for wind.

Cost comparable

Wind has other advantages over some of its clean energy competitors, points out Michael Storch, executive vice-president of strategy and corporate development for Enel North America. Not only is it cost-competitive with new nuclear and coal plants using carbon capture and storage, he says, but it is also more palatable. "Quite frankly, I would love to have a wind project go up against a nuke or a clean-coal project when it comes to the question of what do you want in your backyard. And when you look at the costs of nukes and clean coal, wind without subsidies is very competitive."

A major competitor for wind under a federal CES would be natural gas generation, which the White House suggests should receive "partial credit" towards meeting the target. But even then, says Mann, wind has attributes that set it apart.

"We need to continue to remember that the product we're providing is not the same as the product that natural gas, for example, is providing. It's intermittent, but it also has zero emissions and zero fuel use and it has an ability to be priced at a fixed price for a very extended period of time," he says. "As we go towards that clean-energy standard, if we get there, we need to make sure that the parameters that wind offers continue to be valued in the market."

The question of whether a divided Congress is able to "get there" when it comes to passage of a federal CES remains up in the air. Michigan Republican Fred Upton, who chairs the House Energy and Commerce Committee, has said that he doesn't plan to spend much time on Obama's CES proposal. He says he doesn't want to "pick winners and losers" in the market and questions the need for a new federal mandate when 28 states already have renewable-energy standards.

The most likely forum for action is the Democrat-controlled Senate. Jeff Bingaman, a New Mexico Democrat who chairs the Senate Energy and Natural Resources Committee, is a long-time advocate of a federal renewables mandate who has resisted calls for a broader CES. Bingaman doubts it would drive significant new investment. But, in a recent speech to the centre-left think-tank NDN, he said he is ready to "work with colleagues on both sides of the aisle" to draft workable legislative proposal to achieve Obama's goal.

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