No Breeze for Wind Power in 2004

In its first quarterly market outlook report for 2004, the American Wind Energy Association (AWEA) forecast that new installations during the year will be less than 500 MW, compared with a near-record 1,687 MW of new capacity in 2003. If the PTC extension is delayed past the Congressional summer recess, the number will likely be much lower, because wind plant developers need a few months of lead time to arrange for the purchase of equipment, obtain permits, and arrange for financing and construction.

Washington D.C. – May 18, 2004 [SolarAccess.com] According to AWEA, the reason for the drastic fall-off has been 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 (see previous article). 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. “Congress must act quickly to extend the PTC so thousands of people in the wind industry can get back to work,” said AWEA legislative director Jaime Steve. “There are many wind projects throughout the country ready to move forward that will create jobs, spur significant rural economic development, and produce clean, emission-free electricity for consumers.” 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 modern wind industry was born in the U.S., but our early technology lead was squandered with the lack of a consistent policy environment,” said Randall Swisher, AWEA’s executive director. “Today, a wide range of U.S. companies are interested in the wind industry, but many are staying on the sidelines because of the on-again, off-again nature of the market produced by frequent expirations of the PTC,” 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. The damage to the industry affects companies all along the supply chain: fiberglass manufacturers that make wind turbine blades; makers of other components such as towers, generators, and gearboxes; trucking companies that haul turbines and other equipment to new wind farm sites; and many more. 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 nation’s power needs. Courtesy of AWEA’s Wind Energy Weekly

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