May 31, 2004—The balance of 2004 looks like a difficult period for the U.S. wind energy industry, according to the American Wind Energy Association (AWEA).
AWEA said that it is forecasting little to no growth in installed wind generating capacity this year, compared with a near-record 1,687 megawatts (MW) (enough to serve nearly 500,000 homes) of new capacity installed in 2003.
The reason for the drastic fall-off? The inability of the U.S. Congress to pass a timely extension of the federal wind energy Production Tax Credit (PTC), which expired Dec. 31, 2003. On May 11, the Senate passed legislation containing a three-year extension of the credit, to December 31, 2006. However, that legislation must still be approved by the House of Representatives and a Senate-House conference committee before it is ready to be signed into law.
AWEA now projects that new 2004 installations will be less than 500 MW. It warned that the number is dropping daily and will continue to drop until Congress extends the PTC. Wind power plant developers require at least six months of lead time to arrange for the purchase of equipment, obtain permits, and arrange for the financing and construction. The longer an extension is delayed, the less likely a project can be completed before year’s end.
With the PTC, wind power is now in an increasingly competitive range with other generation sources, and the cost of wind-generated electricity is not affected by fuel price volatility. Unlike natural gas, wind energy costs are predictable over time: once a plant is built, the cost of producing electricity is stable and the fuel source is free.
The nearly 1,700 MW of new wind power installed by the wind industry last year brought $2 billion of new investment to rural areas of the country. Most industry participants predicted that 2004 could have been an even better year than 2003 had the PTC not expired. According to AWEA, the U.S. could easily install 2,000 MW of new wind power per year in the short term.
If the wind industry were to consistently grow at a rate of 18% per year, AWEA said, six percent of the nation’s electricity could be generated by wind power by the year 2020, resulting in over $100 billion of investment in rural America. Over the last five years, U.S. wind capacity has expanded at an annual average rate of 28%, showing that the supply chain can ramp up quickly to meet the nations power needs. Without a PTC extension, however, the U.S. will likely see very few new installations this year.
For more information, contact AWEA.
