United States

United States

Maintaining momentum

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The wind industry in the US is booming. Finally. After years of relative inactivity, we expect US wind capacity to increase by around 50% by the end of next year -- between 1000 and 1500 MW of new capacity. There are many reasons for this growth spurt, which began in the last quarter of 1998.

o First, the cost of wind has declined enough to be cost competitive with new fossil generation for large projects in areas with excellent winds.

o Second, the movement toward "Customer Choice" and competitive markets for electricity has been good for wind and other renewables. Over 190 electric utilities in the US are now offering a wind-based electricity product to their customers, raising wind energy's visibility.

o Even more important than this Green Market, however, have been state renewable energy purchase requirements in states such as Minnesota, Iowa and Texas. These policies, which have resulted in large projects developed under long-term contracts, have helped optimise wind energy's economics. With the price of natural gas having doubled in the past year, wind has demonstrated -- thanks to the Texas Renewable Portfolio Standard -- that it can now be a least-cost source of power in states with a strong wind resource.

o Finally, of course, the wind Production Tax Credit (PTC) is scheduled to expire at the end of 2001, driving decision making by many utilities that want to make sure they are able to take advantage of the incentive.

What do we need to do to maintain the momentum in the US wind market? First and foremost, we need to extend the wind PTC. This will be AWEA's highest priority by far next year. The PTC has broad bipartisan support. I am confident we will be able to demonstrate even stronger support in 2001 than we did during our last PTC campaign. But there is no way that Congress, given its slow, deliberative pace, (especially on major tax legislation), will move fast enough to extend the credit before next fall, and with a new Administration the pace of action may be even slower than normal.

A second key issue, but longer term, is electric industry restructuring, and ensuring that strong renewable energy market incentives are included in both federal and state restructuring legislation. AWEA developed the Renewable Portfolio Standard (RPS) concept more than five years ago as our primary policy vehicle to advance wind in competitive electricity markets. We have been gratified to see the RPS included in major federal restructuring bills, including the Clinton Administration's, but it has been even more encouraging to see at least eight different states adopt an RPS. While some states have done a poor job of implementing the concept, the Texas RPS has provided a model of how to "do it right." Although restructuring has been slowed at the state level by the debacle in California, there is no reversing the movement toward competitive markets in electricity. If anything, increased concern about electric reliability makes federal restructuring legislation more likely because of the need for Congress to reassure industry and consumers that are worried about power reliability.

Our third major challenge is ensuring that transmission does not become a major constraint to wind's future growth. That is, the rules for pricing and operating the transmission system reflect the characteristics of conventional electric generating technologies, and those rules must often be modified for wind to be able to be developed and brought to market cost-effectively. We have begun a major long-term transmission initiative to try to ensure that transmission doesn't become a barrier to wind energy's future, and we are making progress, but it is a huge undertaking.

Good friends with both

Next year will bring a new Administration to the White House. There is no question there are major differences between the two parties, but wind energy enjoys broad bipartisan support in Washington. We have good friends in both parties, and we expect that AWEA will be able to forge a strong working relationship with either a Bush or Gore White House.

You will be able to judge that yourself if you join us for AWEA's next annual conference, Windpower 2001. The event will be held in Washington, and it will be an opportunity to hear directly from representatives for the new Administration.

Regardless of whether Gore or Bush is in the White House, we expect wind energy to continue its strong progress in the US. The "dark days" of the mid-90s are behind us, and wind energy will continue to make steady progress toward being an increasingly significant part of the electric generation mix in the US.

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