1Q wind power results: Production Tax Credit proves effective at driving installations as expiration looms
Publication date: 2 May 2012
Once again proving the success of the Production Tax Credit in tandem with continuing technology improvements in creating jobs and driving billions of dollars of private investment, the wind power industry posted one of its busiest first quarters ever, according to the American Wind Energy Association’s (AWEA) first-quarter market report for 2012.
The U.S. saw 1,695 megawatts (MW) of wind capacity installed in the first quarter, with 788 additional turbines—largely made in the USA—producing clean, affordable, power in 17 states. No other first quarter has been as strong for the American wind power industry, which has tapped the Production Tax Credit (PTC), the industry’s primary policy driver, to establish a strong and efficient—and still growing—manufacturing supply chain here in the U.S. The 1,695 MW installed brings the total installed wind power capacity in the U.S. to 48,611 MW.
But in spite of the success of the industry and the PTC, policy uncertainty threatens the very future of American wind power. The PTC, which keeps taxes low on one of the greatest sources of new American manufacturing jobs and has broad bipartisan support, is set to expire at the end of the year, and already the supply chain is feeling the effects of the uncertainty. A recent study found that extending the PTC will allow the industry to grow to 100,000 jobs in just four years, while an expiration will eliminate 37,000 jobs.
The wind energy industry installed 52 percent more megawatts in the first quarter than it did the same quarter in 2011. Continuing a trend that became evident at the end of last year, under-construction numbers were also exceptionally strong in the first quarter, clocking in at 8,916 MW, with 2,284 of that total starting construction just this quarter. Also notable: construction is taking place in 31 states and Puerto Rico.
“The last five years have been marked by unprecedented policy stability, and in response wind power has delivered,” said AWEA CEO Denise Bode. “American wind power contributed 35 percent of all new electric generating capacity between 2007 and 2011, and today it employs 75,000 people.
“The choice is clear: with policy certainty, we’ll grow to 100,000 jobs in just a few years. Without it, 37,000 jobs will disappear, particularly in U.S. wind manufacturing. It’s up to Congress to act now and extend the PTC.”
As for project development hotspots during the first quarter, California (370 MW), Oregon (308 MW) and Texas (254 MW)were the leading states for adding the most wind power. Rounding out the top 5 were and Washington (127 MW) and Pennsylvania (121 MW).
One notable trend, previously highlighted in AWEA’s 2011 annual market report, continued to emerge in the first-quarter numbers: with ever-improving technology, wind power is accessing wind resources in geographic areas considered to have inadequate wind resource just a few years ago. That trend is reflected in the states with the most growth in 2012′s first quarter. Top on that list is New Hampshire with a head-turning growth of 388 percent, followed by Arizona (72 percent), Massachusetts (17 percent) and Pennsylvania (15 percent). Wind power veteran Oregon rounded out the top five with 12 percent.
Yet despite the productive first quarter, wind industry jobs remain on the line and layoffs are predicted to start quickly in the industry’s supply chain. New graphics, recently released by AWEA, link the 37,000 industry jobs in jeopardy with the industry project development and turbine manufacturing cycle, showing how those jobs would be lost within a year if Congress does not extend the PTC soon.
Just last week, the House Ways and Means Committee met to prioritize a list of possible tax extensions that deserve swift action by Congress. The PTC extension, led by Congressmen Dave Reichert (R-Wash.), Earl Blumenauer (D-Ore.), and Steve King (R-Iowa), was one of the most talked-about pieces of legislation because of the number of jobs at risk, particularly in manufacturing The PTC remains one of the most bipartisan bills in Congress, with 21 House Republicans joining Democrats in supporting the Reichert-Blumenauer bill for an extension. Throwing their support behind the PTC is a broad spectrum of organizations including the U.S. Chamber of Commerce, National Association of Manufacturers, the American Farm Bureau Federation, the Edison Electric Institute, the Western Governors’ Association, and the United Steelworkers.
Other highlights of the first quarter and the U.S. Wind Industry First Quarter Market Report 2012 that AWEA released today include the top 5 states for under construction:
- Kansas – 1,340 #MWs
- Texas – 914 #MWs
- Oklahoma – 894 #MWs
- California – 777 #MWs
- Illinois – 705 #MWs
The public version of the AWEA First Quarter Market Report is available here. The full version of the AWEA First Quarter Market Report as part of the AWEA Wind Market Analysis Suite can be accessed by logging into the AWEA Member Center or clicking here. The full version of the quarterly report includes a list of under-construction projects, project activity by region, power purchase agreements, requests for proposals and analysis of power offtake agreements.
About the Production Tax Credit:
The PTC is a tax incentive that helps keep electricity rates low and encourages development of proven clean energy projects. Private investment generated over the last five years of relative PTC stability averages $15.5 billion to as much as $20 billion a year.
The wind energy PTC will expire at the end of in 2012 unless Congress takes action. Failure to extend the PTC would lead to job losses and will put the brakes on the progress America has made to include clean, affordable, homegrown energy as part of the U.S. electricity portfolio.
Facing the threat of the PTC expiring, wind project developers have become hesitant to plan future U.S. projects and American manufacturers have seen a marked decrease in orders. The wind industry is facing the recurrence of the boom-bust cycle it saw in previous years when the PTC was allowed to expire. In the years following expiration, installations dropped by between 73 and 93 percent, resulting in major job losses.
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