The GREEN DMV Report
July 2011
American Wind: Powering Forward In Spite of Policy Uncertainty
Contributing Writer: Denise Bode

Wind power has arrived. It’s clean, it’s affordable and it’s homegrown, made right here in the USA.

That’s why more than ever, Americans are choosing this now-mainstream energy source. An impressive 89 percent of Americans want more wind energy and, to a great extent, the electric industry is answering. Since 2007, 35 percent of all new generating capacity came from wind—twice what coal and nuclear added combined.

Benefits that power America

What are the reasons for this strong trend?

American wind is one of the most affordable forms of new energy. Wind energy costs have fallen below most new conventional sources and are close to cost-competitive with new natural gas generation, even at today’s unsustainably low shale gas prices. (Market prices take into account the various incentives that all energy sources receive, and wind’s competitive position over the next few years will depend on extending those tax incentives.)

Moreover, because the wind that turns the turbine blades is free, utilities can lock in the price they pay for power. That provides utilities—and consumers—with a key hedge against the ever-volatile fossil-fuel prices affecting other generation technologies in their portfolio.

America is already reaping the economic benefits of wind power. Today the wind industry supports 75,000 direct and indirect jobs. Over 400 manufacturing facilities now produce products for the wind industry, countering the much-publicized national trend of manufacturing jobs going overseas.

Just last year, 14 new plants came online, to help produce some of the 8,000 components that make up a wind turbine, and 50 percent of a U.S.-deployed wind turbine’s value is now made here in America, up from 25 percent just a few years ago. That trend of “on-shoring” promises to continue, for wind turbine manufacturers generally prefer to source their components near their customers—that is, near to where developers are building wind farms.

America, in fact, boasts the perfect combination of massive electricity demand and a wind resource that is one of the best in the world. Wind power also provides tremendous economic benefit to local communities, providing a stable source of revenue to farmers and ranchers via lease payments and tax revenue to rural communities.

Competing on an uneven playing field

Yet, in some respects, it’s a wonder there’s a wind industry at all, when you consider the lack of certainty companies have had to confront through the years. First, consider nearly 100 years of policy stability and support that have provided older technologies with a consistent environment in which to operate, plan and grow. Next, consider wind power. The federal Production Tax Credit—the primary financial policy for the industry through the years—has been extended mostly in one- and two-year intervals, and even allowed to expire on occasion. The result is a pattern of up-down fluctuations for the industry.

Thus, the American wind industry is delivering, despite competing with energy sectors that have permanent government subsidies in place. Stable policy to create a predictable business environment is the key to continued growth of American wind power, and most pressing is the need to extend the frustratingly short-term federal Production Tax Credit (PTC), rather than waiting until it expires in 2012. Just think what wind power can do for America—from creating jobs to providing clean, affordable, homegrown energy—if it competes on a level playing field with more traditional energy sources.

All signs point to wind power

In spite of such challenges, wind power continues to progress forward and remains America’s choice for both today and tomorrow. In the absence of federal policy, states, seeing a can’t-miss opportunity, are leading the way in fostering the development of wind power, with some 30 states instituting binding renewable energy targets. Moreover, other market drivers continue to emerge. The recently announced WindMade™ label will to identify companies that use wind energy will soon give individuals the opportunity to change how the world consumes energy, one product at a time.

Meanwhile, with the era of the electric vehicle upon us, wind power can play a huge role in powering the transportation sector. Running an electric car on wind power costs less than 3 cents a mile, compared to over 15 cents a mile for gasoline.

In other words, powering your car with wind is like paying 70 cents a gallon at the pump—saving you over $1,400 a year!*

Right here in the Washington, D.C., area, electric vehicle charging stations can be found at locations ranging from MOM’s Organic Market in College Park, Md., which advertises that it is 100% powered by wind, to Washington’s Frank D. Reeves Center of Muncipal Affairs at 14th and U Streets.

Only the beginning

In spite of the amazing strides the wind power industry has made during the last several years, the U.S. remains reliant on but a few conventional energy sources, and so the nation must further diversify its energy portfolio.

Because of policy uncertainty (in addition to weak electricity demand growth as a result of the flagging economy, among other factors), the last two years have seen the typical up-down wind industry cycle continue. A record 10,000 megawatts of wind power capacity were installed in 2009, but barely half that in 2010 (nevertheless representing 15 percent annual growth).

On the bright side, the U.S. wind market entered 2011 with 5,600 megawatts under construction—more than twice the amount under construction at the start of last year.

America remains ahead of schedule to produce 20 percent of its electricity by 2030 with wind, as laid out in a report from the Department of Energy during the Bush Administration. We know wind is ready to deliver even more of our portfolio with clean, affordable, homegrown power. All it requires is America’s commitment.

Denise Bode is the Chief Executive Officer of the American Wind Energy Association, the national trade association of the U.S. wind energy industry. Ms. Bode is a nationally recognized energy policy expert and was elected twice, state-wide, to the Oklahoma Corporation Commission, where she served for 10 years.

Her experience of more than 30 years in the energy field is extensive and diverse, including serving as CEO of the American Clean Skies Foundation, President of the Independent Petroleum Association of America (IPAA), a tax partner in the Washington, DC law firm of Gold and Liebengood, Inc., and nine years on the staff of then-U.S. Senator David Boren (D-OK) as his legal counsel, focusing on the areas of energy and taxation and staffing the Senate Finance Committee.

Ms. Bode holds a Bachelor of Arts degree from the University of Oklahoma, a Juris Doctor degree from the George Mason School of Law, and a Masters of Law in Taxation degree from the Georgetown University School of Law. In 2009, the honor of "Woman of the Year" for the Women's Council for Energy and the Environment (WCEE) was bestowed on Ms. Bode, and she was named one of the Washingtonian's "100 Most Powerful Women of Washington."