U.S. Wind Farm Developers Hang Their Hopes on Tax Credit

WASHINGTON, DC, August 26, 2003 (ENS) - The United States will install 1,400 to 1,600 MW of new wind power this year, according to the American Wind Energy Association (AWEA), the national trade association of the U.S. wind energy industry.

While the outlook for the rest of the year is strong, the AWEA warned that the wind industry's future will depend on whether Congress extends the wind production tax credit scheduled to expire December 31. Developers are pushing to complete projects by the end of the year in order to qualify for the production tax credit authorized for this year.

Project developments now underway could increase the cumulative total of U.S. installed wind capacity to over 6,000 megawatts (MW) up from just 240 MW 20 years ago, according to the AWEA's quarterly assessment of the wind energy market, released August 20.

That level of capacity produces about 16 billion kilowatt hours of electricity, enough to serve 1.57 million average U.S homes.

This Micon 108 wind turbine was commissioned in September 2002 near Canova, South Dakota> It is owned by the City of Canova. (Photo courtesy Energy Maintenance Service, Inc.)

A quick extension of the tax credit is urgently needed, Swisher said, to ensure that the momentum gained toward industry growth is not lost as it has been in the past when the credit expired.

A three year extension of the credit is included in both the House and Senate versions of comprehensive energy legislation now pending in Congress.

"The industry's growth continues to be hampered by a wide range of market barriers, from utility unfamiliarity with the technology to problems obtaining fair access to transmission lines," Swisher said. "The PTC provides the stimulus needed to overcome these barriers and open the market, and its extension is critical to the industry's future."

Wind power development is also a critical component of the whole U.S. energy picture. Every unit of electricity that is produced by a wind farm is one for which the country does not have to burn natural gas or other resources.

Energy Secretary Spencer Abraham announced last month that U.S. natural gas reserves are low, and warned Americans that they will face price hikes this winter.

Assistant Energy Secretary Vicky Bailey told a natural gas forum in New Hampshire Thursday that current stocks of natural gas in underground storage are unusually low due to a combination of cold weather in parts of the country and declines in both domestic production and net imports. At the same time, she said, demand is projected to grow 50 percent over the next 25 years.

The wind industry association believes that more wind plants provide the quickest supply-side option to ease the natural gas shortage. The AWEA estimates that the installed capacity of 6,000 MW of wind power expected by year's end will save approximately 0.5 billion cubic feet of natural gas per day in 2004, alleviating 10 to 15 percent of the supply pressure now facing the natural gas industry.

The largest wind power project to be installed in the U.S. this year - the 204 MW New Mexico Wind Energy Center built by FLP Energy - is expected to produce energy to supply more than 51,000 homes. More than six billion cubic feet of natural gas per year would be needed to generate the same amount of electricity, the AWEA says.

The King Mountain Wind Ranch near Odessa, Texas, added almost 77 MW of capacity to the state's wind power capacity in 2001. (Photo courtesy Cielo Wind Power)

The Senate has also approved a Small Turbine Investment Credit for homeowners who install residential wind machines, which the AWEA supports.

The association points out that the best wind power resource in the country is in rural areas, where it is a source of skilled jobs, income to farmers, and taxes to the community.

A consortium of wind power leaders - including Shell WindEnergy, Padoma Wind Power, Green Mountain Energy Co., TXU Energy, Cielo Wind Power, and Orion Energy - has announced that it would build a 160 MW project in western Texas that will contribute to the local economy. When operational at the end of this year, the wind farm, 90 miles southeast of Lubbock, will generate enough electricity for some 30,000 homes.

The consortium will lease the land for the project from private farmers and ranchers, who can receive $2,000 to $3,000 per turbine annually, with no more than 2.5 acres per turbine removed from production for turbines, access roads, and other equipment, says the AWEA.

David Jones, director of Shell WindEnergy, said the branch of Shell Oil is "committed to being a major player in the American wind sector."

States in the Upper Midwest - North and South Dakota, Minnesota, and Iowa - will add more than 375 MW of new wind power in 2003. "If those states were to generate the same amount of electricity with America's current fuel mix, it would create nearly 600 million tons of carbon dioxide," the AWEA said. "Using the wind instead is like taking more than 160,000 cars off the road."

A state by state map of installed wind energy capacity is online at: http://www.awea.org/projects/index.html