Project Development, Wind Power

Wind Industry Credits Texas for Good Legislation

Legislation adopted by Texas under former Governor George Bush is the most effective policy that any state has adopted to promote renewable energy, says the American Wind Energy Association.

WASHINGTON, DC, US, 2001-03-22 <> A survey by AWEA of state incentives and policies for wind energy demonstrates that the minimum renewable energy requirement adopted by Texas is the best in the country. “Simply put, states can jump-start the local market for wind energy by adopting an effective Renewables Portfolio Standard,” says AWEA executive director Randall Swisher. “Such a policy needs to be done right, however, and Texas is demonstrating just how to do that.” The survey lists the incentives and policies adopted to promote wind power by each state, including tax credits, low-interest loans, research programs and legislative requirements such as the minimum renewable energy requirement under Renewables Portfolio Standards. The current wind rush in Texas has been triggered by the RPS that is included in the state’s electricity restructuring legislation, explains Swisher. Six other states have adopted an RPS, some as part of restructuring laws, but none with the stunning results of Texas. Texas legislators were careful to set the requirement high enough to trigger market growth and to make the requirement apply across the board to all electricity providers. They also use proof of compliance from tradable renewable energy credits, which ensure flexibility and least-cost implementation of the requirement. The state also set penalties for non-compliance, and these features often are missing from the RPS adopted in other states. There are 600 MW of new wind projects and 100 MW of other renewable energy projects that are under development or currently proposed for Texas. By the end of this year, wind turbines with total capacity of 800 MW will be generating 2.5 billion kWh each year, sufficient to serve 200,000 homes. The RPS is an effective policy to promote new investment in renewable energy, says Swisher, whether a state restructures its utility industry or not. More than 20 states currently provide limited economic or financial incentives for wind energy, the majority of which are targeted toward small installations and usually involve income tax or sales tax credit, low-interest loan or net metering. The most effective incentive for small wind systems is the rebate, or “buy-down,” currently offered in California and Illinois, which reduces the cost of new turbine by up to 60 percent. Few states provide incentives for utility-scale wind energy, notes the survey. “An overlay of a map of the nation’s wind resources with that of installed wind farms demonstrates that state policies are a determining factor in the development of wind energy,” adds report author Christine Real de Azua. “Conventional energy sources are heavily subsidized, so incentives for wind energy help level the playing field for the wind energy industry.” “Even when economic calculations show that wind is the most affordable energy source, as they often do nowadays, utilities and businesses can remain reluctant to invest in wind because they are unfamiliar with the technology or because it comes with high up-front costs,” she explains. “That’s when policies such as an RPS can help them make the right economic decision.” Global wind capacity is 17,000 MW and turbines generate 34 billion kWh of electricity each year. The technology was the world’s fastest-growing energy source last decade, expanding at annual rates of 25 to 35 percent. Last year, 3,500 MW of new capacity was installed with an investment of $4 billion, but only 53 MW of that total was installed in the U.S. AWEA estimates that 1,800 MW of new wind capacity will be installed in the United States this year. California leads the country in terms of installed wind capacity with 1,646 MW, followed by Minnesota with 272 MW) Iowa with 242 MW and Texas with 188 MW. The federal government provides a tax credit of 1.5 cents per kWh for electricity generated by a wind plant during its first ten years of operation. The credit will expire at the end of this year unless extended by Congress. The Texas law requires the construction of 2,000 MW of new renewable energy generation by 2009, and new wind projects of 160, 208 and 82.5 MW have been announced in the state within the past few months. Every 100 MW of wind development generates $1 million in property tax revenue, and creates 500 job-years of employment. Each 660 kW turbine will displace the emission of 1,100 tons of carbon dioxide, as well as sulfur dioxide and nitrogen oxides, based on the U.S. average utility fuel mix.