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The numbers are in and…it’s a bit of a mixed bag.  Nationally, we saw a 15% increase in capacity since the beginning of 2010.  That’s an increase of 5,115 megawatts and brings the country to 40,180 megawatts.  Unfortunately, that’s 50% less growth than we saw in 2009.

Minnesota, National Wind’s home state, added 22% capacity, beating the national mark.  The state added 400 megawatts in 2010.  The added capacity brings Minnesota to 2,200 megawatts of wind energy and bumps it to #5 in the nation for total capacity.

Internationally, the big news is that China has supplanted the U.S. as the world leader in wind energy.  China added 16,000 megawatts in 2010, more than three times that of the U.S., bringing its total to 41,800 megawatts.  These numbers reflect tremendous growth–China’s wind energy capacity increased by 62% last year.  The U.S. had led the world in most wind energy installed since 2008 when it overtook Germany for the top spot.

Elizabeth Salerno, AWEA Director of Industry Data & Analysis, argues that 2011 is likely to be a better year for U.S. wind than 2010. “Wind’s costs have dropped over the past two years, with power purchase agreements being signed in the range of 5 to 6 cents per kilowatt-hour recently,” Salerno said. “With uncertainty around natural gas and power prices as the economy recovers, wind’s long-term price stability is even more valued. We expect that utilities will move to lock in more wind contracts, given the cost-competitive nature of wind in today’s market.”  That, combined with the fact that we’ve entered the year with 5,600 megawatts already under construction, suggests a brighter outlook.

Wind energy still faces challenges, however.  Chief among these is the inconsistency of federal support.  The Production Tax Credit is set to expire in 2012.  The American Recovery and Reinvestment Act’s Treasury grant program, set to expire in 2010, received a last-minute extension through 2011.  We still lack a national renewable portfolio standard.  Congress continues to pass short-term measures and pass the football on the kind of long-term, consistent standards required to ensure clean energy will have a prominent place in our future.  The uncertainty caused by this inconsistent support hurts investment and slows growth.  The fact that China has overtaken us is evidence of this–they’ve shown leadership, so where’s ours?

Passing a national Renewable Energy Standard (RES) this summer was one of Congress’ main goals before it ran out of time in August. Luckily, however, an RES remains on the agenda for the fall. In fact, you could say it is back by popular demand: senators from both parties are expressing strong support for passing an RES before the November elections, and on September 12th the 26 state governors of the Governors’ Wind Energy Coalition (GWEC) wrote Congress expressing the urgency of passing an RES for their states. This groundswell of support in Congress led Senate Majority Leader Harry Reid to declare “we are going to keep working on this. You won’t hear the last of us until we adjourn.”

The letter from the GWEC, which includes governors from both parties across the country, described “job creation, secure energy supplies, and cost-effective carbon emissions” as some benefits of a national RES. This is consistent with the findings of the American Wind Energy Association (AWEA), which states that an RES of just 15% would guarantee 85,000 US jobs. This 15% standard is less than what is already required by many states that have passed their own standards.  In addition, an RES would attract huge investment in the renewable industry. For instance, according to the AWEA, CEO Lew Hay of NextEra Energy has already pledged that his company would invest an additional $2.5 billion dollars per year in renewable energy if an RES were to pass.

Above all else, pro-RES senators and governors have stressed the urgency of passing a renewable mandate sooner rather than later. This reflects the idea, long voiced by industry leaders such as General Electric CEO Jeff Immelt and AWEA CEO Denise Bode, that securing investment in the US renewable energy sector is a time-sensitive issue. An RES will guarantee a market for renewable energy in the US far into the future. However, other countries (particularly China, which recently surpassed the US in annual wind installments) are already making big investments in renewables and securing much of the global investment and jobs. If the US wants to make itself the world’s renewable energy leader and thus gain a valuable export industry, it has to act soon.

One of the best attributes of a national RES is that it would bring the benefits of wind to states that don’t have enough wind resources to support large project development, especially the southeastern part of the country. These regions would likely experience a growth in manufacturing jobs as wind component factories open their doors. The RES would also ensure wind would comprise much of the energy on the grid, even if that energy is not actually produced in the region.

In a recent interview with Yale Environment 360, Christian Kjaer, CEO of the European Wind Energy Association, talked about the best way for the US to match Europe’s considerable progress in generating wind energy:

“I think if there were one word to communicate to U.S. policymakers, it is that you need stability. I’m saying that because the U.S. framework for investing in renewables is very unstable — I mean, it cannot be predicted more than one or two years ahead. And that also means that the United States is not reaping the job creation benefits of wind energy, because a lot of components, a lot of manufacturing is imported because no one’s going to invest in a factory in the United States if they don’t know how the market looks beyond the next two years.”

An RES, by guaranteeing a market for wind energy in the US, would provide exactly the kind of long term stability Kjaer is talking about. So contact your Senator about supporting a Renewable Energy Standard today!

One part of President Obama’s 2009 stimulus bill that has benefitted wind energy and other sources of renewable energy is a program designed to help clean power projects pay off their loans. Known as the Renewables Loan Guarantee Program, it has already provided $1.481 billion to 10 different projects. In doing so, it’s accelerated those projects’ development and produced new jobs. Unfortunately, the program has also suffered some budget cuts, including a $2 billion deduction in late 2009 and most recently, on August 10th, another $1.5 billion. As a result, the original $6 billion dollar program is now down to $2.5 billion. While there is still a good deal of money left, and the program has already done admirable things, these are significant cuts which will slow down the arrival of clean electricity production in our energy mix and green job growth in our economy. We think these benefits form a strong argument for supporting continuous renewable energy investment.

All is far from lost, though. First of all, Congress has promised to restore the Loan Guarantees funds at a later date; it’s just a question of when they can find enough cash to do so. In the meantime, the American Wind Energy Association (AWEA) and other renewable energy trade associations are hard at work campaigning to get the funds restored as soon as possible. According to a letter they wrote to Senate Majority Leader Nancy Pelosi:

“Failure to Failure to act on the Treasury Grant Program and other tax incentives or to restore funding to the DOE Loan Guarantee Program will jeopardize the renewable energy industries’ efforts to develop clean electric generation and create tens of thousands of jobs.”

Even though the project has lost funding, it has been strengthened in other ways. The program’s application deadline was originally August 24th 2010, but is now extended to October 5th,  allowing more projects to take a shot at the money. In addition, the Department of Energy recently invited companies that manufacture the parts used in renewable energy projects to apply for the grant as well (in the case of wind energy, these “parts” might include things like turbine blades and generators). All of these changes open the funds to a broader range of applicants.

Even outside the range of this one specific program, the general public policy landscape remains a source of optimism among renewable energy advocates.  The Production Tax Credit (PTC) supporting wind energy development is guaranteed by the stimulus bill to remain in place at least through 2012.  Also, while a national Renewable Energy Standard failed to pass during the last legislative session, there is growing national support for enacting one. In light of this,  government policy toward wind energy looks like it will remain very supportive despite the recent cuts.

China Wind Farm

Photo by: Mike Locke

The United States wind industry gained a new competitor as China surpasses Germany last year to reach the world’s #2 spot for total installed capacity.  Currently, the US sits in a comfortable lead with 35,159 MW of total installed capacity;but with China’s exponential installation growth, our hold may not be very strong.  According to the Global Wind Energy Council (GWEC), in 2004, there were only 764 MW of wind capacity installed in China.  That number has been doubling almost every year, reaching 25,805 MW by the end of 2009.

Goals for wind turbine installations have been growing as well.  In 2007, China announced a national target of 5,000 MW installed by 2010.  Only a year later, that number increased to 10,000 MW.  After a whopping 13,785 MW growth in 2009, China set a new target of 35,000 MW installed by 2011, and 150,000 MW installed by 2020—a fivefold jump from the original 30,000 MW goal in 2007 and 50,000 MW more ambitious than the US goal of 100,000 MW installed by 2020.

The push behind China’s renewable energy boom lies in their National Renewable Energy Legislation.  First effective in 2006, the legislation states a national preference for the development and utilization of alternative energy resources.  This meant setting a national commitment of 15% renewable energy use by 2020 and providing increased government funding for green energy research and projects.  The legislation also requires power grid operators to purchase all energy generated from renewable sources, with a penalty for those who do not abide.

wind turbine production

Engineers work on a wind turbine part.

Despite our difference in governing styles, the United States could stand to learn a thing or two from China’s National REL—especially in the economic success it has created.  According to the Chinese Renewable Energy Industries Association (CREIA), renewable energy accounted for 1.12 million jobs in 2008 and is climbing by 100,000 each year.  The majority of these jobs come from manufacturing companies.  China is currently the leading producer of wind turbines and solar panels.  In the wind industry, that success was facilitated by the adoption of the “70% domestic” rule in 2004 which states that all turbines in Chinese wind farms must have at least 70% of its parts made in Chinese factories.  The impact was phenomenal.  The Chinese turbine production industry has grown from only six manufacturers in 2004 to nearly 90 at the end of 2009.  The government recently abolished this requirement to allow for more participation in the international market.  According to GWEC, only 17 Chinese-made wind turbines were exported in 2009.

The American market has the potential to grow at such an electrifying pace as well if we adopt a National RES.  The “Job Impacts of a National Renewable Energy Standard” study, conducted in 2009 and published by the RES Alliance for Jobs, found that a 25% by 2025 national standard would support an additional 274,000 jobs than an industry without a public policy.  The American Solar Energy Society’s (ASES) Green Jobs Report also forecasts more favorable outcomes for implementing an RES.  In the “business as usual” scenario, which means no changes in policy or major initiatives, the report only predicts a 130% increase in revenue and a 160% increase in jobs created in the next two decades.  The alternative scenario, which calls for a sustained public policy commitment, predicts a potential revenue growth of 1,200% and a 1,300% increase in jobs in the next two decades.  These are astounding differences for the adoption of one piece of legislation.

Figure 1

Change in Renewable Electricity Supported Jobs in 2025 With a 25% RES by 2025.

Every other summer, my parents and I take a trip back to China to visit our family.  I will never forget how my homeland greets me as I step onto its streets.  Outside, the sun burns earnestly on a cloudless horizon.  Its light is obscured by a permanent layer of smog, causing the sky to remain a dusty gray-blue hue and trapping in the oppressive heat.  Take a breath, and the summer’s fever invades the lungs, infecting the veins within milliseconds.  “Sauna days,” my uncle chuckles as he lifts my last suitcase into the car, “do you miss them?”

I don’t.  I really don’t.  Sauna days are the worst part of my Eastern adventures.  Hopefully, these muggy summers become more bearable with the help of a strong national commitment to greener energy, making my future vacations a lot more enjoyable.  As for the rest of the seasons I spend in the good old US of A, here’s hoping we are headed in the same direction.

According to the famous musical which bears the state’s name, Oklahoma is “where the wind comes sweeping down the plain”. With the passage of a new law in the Sooner State, it looks like the state’s energy providers will soon be making more use of it. The law, called the Oklahoma Energy Securities Act (OESA), sets a goal that by 2015, 15% of the state’s electricity should come from clean sources.

Wind projects under development in Oklahoma.

Given that Oklahoma is located right in the middle of Tornado Alley, you’d expect the law to have especially strong effects on the state’s wind industry. And sure enough, Oklahoma is one of the most wind-abundant states in the country. The National Renewable Energy Laboratory (NREL) classifies the vast majority of the state as a Class 3 or Class 4 Wind Power Density area, which is a medium rating. However, most of the places that have high (class 5-7) ratings are difficult-to-access locations such as the crest of the Rocky Mountains. When you look at wind power potential and feasibility together, Oklahoma is about as promising a place for wind development as you can find.

As with all energy legislation, there was considerable debate over the exact terms of the law. The 15% clean energy level was set as a goal rather than a mandate, so companies are encouraged to comply, but not required. However, the law clears the way for Oklahoma to possibly match the “20% renewable energy by 2020” standard of neighbors Missouri and New Mexico. (For a complete look at various states’ renewable energy goals and mandates, click here). It also passed with overwhelming bipartisan support (91-2 in the House) in a state with a senator famous for declaring “global warming is a hoax”.

It is particularly encouraging that the OESA was passed with input and support from Oklahoma’s leading utility companies. One of the companies, Oklahoma Gas and Electric Co., plans to have its energy from wind production jump from 270MW to 750MW by 2012. That’s basically a tripling of wind capacity in just two years.  Hopefully, developments like this point toward a future where popular support for Oklahoma’s wind industry hits a critical mass.

The expected changes accompanying the passage of the OESA also show that wind energy offers environmental and economic benefits at the same time, as the law is expected to create jobs by encouraging wind and other alternative energy companies to locate in Oklahoma. It should also increase the profits of Oklahoma’s already multi-billion dollar wind industry, according to the Tulsa World newspaper.

Cover of the May 10th issue of The New Yorker magazine. Cover by Bob Staake.

Last week’s issue of The New Yorker magazine featured one of my favorite recent covers. As displayed on the left, the cover depicts the morass of Cape Wind, the oft-covered wind farm proposed off the coast of Massachusetts: a pilgrim sails out from the colony of Cape Cod, joust in hand, prepared for a duel with the turbines in front of him. I’ll try and contain the English major side of my personality that really wants to textually analyze the illustration, except to say that I think the allusions to Don Quixote are apt and ferociously clever, as Cape Wind’s journey over the past decade has been nothing if not quixotic.

The last few weeks have provided a veritable flood of news about Cape Wind, and since we haven’t talked about the project in a little while, we wanted to fill you in and ensure that you’re up to date on all the latest developments:

  • First, and perhaps most importantly, on April 27th the US Interior Secretary Ken Salazar announced that Cape Wind had been given regulatory approval to proceed. Hurdles still remain, however. Groups opposed to the project, including the Wampanoag tribe–who believe the wind farm would violate their tribal rights to unobstructed views of the sunrise for sacred ceremonies–are likely to file lawsuits that could delay the project for years. Having said that, Mr. Salazar stated that he does not believe the lawsuits will ultimately derail the project. Another hurdled faced by the project is that when its approval was announced, no agreement had been reached with a utility company to offtake the electricity produced by the turbines. However…
  • …on May 7th, utility company National Grid announced that they would buy half of the project’s output, or a nameplate capacity of 150 MW. That electricity would make up about 3% of the load that National Grid generates or buys. While the electricity produced by Cape Wind will cost more per kilowatt hour than electricity generated by other sources, Jim Gordon, the President of Cape Wind Associates, says National Grid’s customers will see their rates rise by only five cents a day as a result of the purchase. While Cape Wind will need to find an off taker for the second half of their output before securing financing and beginning construction can begin, Gordon said their deal with National Grid will provide a helpful framework when working with other utilities.

So there’s your Cape Wind update in a nutshell. We’ll continue to keep you posted on updates to the project and other cool New Yorker covers.

Much talk has been made of the United State’s need to enact a nationwide Renewable Portfolio Standard (RPS). Proponents claim that it is the only way for government to commit to clean energy technology and spur real growth in what could amount to a “second industrial revolution” that rejoins America’s storied abilities for innovation and manufacturing. However, without structured policies in place that provide well-defined growth mechanisms for new energy options, any RPS is nothing more than a vague, wished-for outcome. On a hypothetical roadmap for the country’s renewable energy future, an RPS can only mark the destination at the end of a long journey. It does not create the roadways to reach that destination.

A feed-in tariff (FIT) may help to pave those roadways. Already active in more than 40 countries around the world, FIT policies have been cited as primary drivers of growth in the renewable energy markets of Spain, Germany, and Denmark — countries now supplying between 15 and 34% of their energy needs through renewable sources. Despite remarks and pledges from President Obama, the U.S. currently supplies only 5% of its electricity needs through wind, solar, and hydro plants. What accounts for this disparity? The European countries have strong FIT’s while the U.S. does not.

The most successful FIT’s work by setting the price of renewable energy types at guaranteed rates, usually slightly above their market values, for a fixed period of time. This property of a FIT immediately stabilizes the investment environment and helps to secure project financing. Energy developers can lower project costs since the volatility of renewable energy markets is eradicated. The greater availability of financing options simultaneously helps to shorten the development timeline and allow smaller companies to better compete. Over time, the fixed rates can be adjusted based on the effectiveness of the policy.

FIT’s, while already successful in European countries, are now starting to arrive in North America. The Canadian Province of Ontario, which has pledged to stop burning coal before 2014, became the first jurisdiction in North America to enact a FIT three years ago. It recently raised the guaranteed rates for wind and solar projects to 13.5 cents/kWh and 80.2 cents/kWh, respectively, to great success. In only months since, the Ontario Power Authority has attracted roughly 1,200 applications representing more than 8,000 megawatts of renewable generation. Many of these applications came from smaller developers and even residential homeowners, underlining the FIT’s ability to attract a variety of investors.

Interest in FIT’s has been slow to catch on in the United States. Some states have passed legislation containing FIT’s, most notably California, and even local municipalities like Gainesville, FL have adopted similar policies to drive significant growth in renewable energy. Other states have tried and failed to enact FIT’s in their state legislature. Minnesota, whose wind potential is significant, seems particularly determined and hard-pressed to implement a FIT. State representatives David Bly and Bill Hilty have introduced legislature that would establish fixed rates for renewable energy on two separate occasions (February 2008 and February 2009) but failed to get a hearing on their bills in both instances. A lack of guaranteed access to the electric grid, a common provision of European FIT’s, may be keeping state FIT’s from gaining traction.

In a speech to a joint session of Congress on February 24th of this year, Obama declared that America will double its supply of renewable energy over the next three years. It is a lofty goal considering that Congress has yet to pass the current energy bill. Even if that bill’s provisions that call for a federal transmission authority and a national RPS are retained, we may find ourselves without the renewable energy surge that the bill intends to ignite. It may behoove our state and federal legislators to seriously contemplate the FIT policies that have already produced this intended effect elsewhere around the globe.

At least one part of President Obama’s stimulus bill is having its intended effect: reinvigorating investment in wind energy. Since slowing down in the first half of 2009 after torrid growth in 2008, money is again flowing into the wind industry from all directions.

On Tuesday, the U.S. Departments of Energy and Treasury handed out the first round of grants from a federal program created to induce investment in renewable energy. The program has distributed over $500 million in grants thus far, with the vast majority going to wind projects. These stimulus funds will provide a huge boost to the wind industry, giving momentum to projects that slowed during the economic downturn.

The program functions by providing a cash rebate equal to 30% of total investment as soon as the wind project begins producing energy. The grants are available to projects that begin construction by the end of 2010 and start operating by December 31, 2012.

However, the government is not the only one suddenly financing wind projects—now Wall Street is once again entering the fray. On Monday, the Wall Street Journal reported that within the last month, Morgan Stanley and Citigroup have each invested $100 million in separate wind farms. The banks, too, are being spurred by the stimulus money, seeing it as a deal too good to pass up.

All this talk of new development brings to mind a report issued earlier this year by the Energy Information Administration. The report, which predicted the country’s energy outlook years into the future, projected that wind energy would make up 5% of all electricity generated in the United States by the year 2012. Five percent is a huge number—it’s four times more wind generation than existed in the United States at the end of 2008. Expanding our wind turbine fleet from 2008’s 1.25% wind generation penetration to 5% would represent a total wind production of over 100 Gigawatts, enough to power over 25 million homes.

Although the market slowed in 2009, 2010 is expected to be a banner year for the wind industry, likely surpassing 2008 as the greatest growth year ever for wind projects. This massive growth is expected not only because of the stimulus money that’s now permeating the industry, but also because of the practicality and economic benefits wind power provides. It’s good news all around.

Last Friday, the U.S. House of Representatives passed the American Clean Energy and Security Act by a vote of 219-212. Among other provisions, the bill contains a renewable energy standard (RES) that calls for 20% of the national electricity to come from renewable sources by 2030, although up to 8% of the standard may be made through energy efficiency improvements.

As we wrote about previously, a national RES that significantly invests in the future of green energy faces many hurdles. Much of the wind industry argues that the RES in its current state will do little to increase renewable energy any more than mandated by current state law, thereby failing to stimulate clean energy development and limiting green job growth.

The Senate Energy and Natural Resources Committee Recently passed their own energy bill that includes a 15% RES by 2021. There is hope the RES portion of the legislation will be strengthened during debate on the Senate floor. If the bill is passed, it will be reconciled with the House legislation in a conference committee.

Despite President Obama’s call for a national Renewable Electricity Standard (RES) that would require utilities nationwide to produce 25% of their electricity through renewable means by 2025, members of the Senate Energy and Natural Resources Committee are having difficulty developing legislation that will reach this goal. After spending the past two months debating the RES as part of a comprehensive energy bill, the committee has gutted the legislation and reduced the RES to 15% by 2021. Furthermore, up to 25% of the renewable energy requirement may be substituted for efficiency improvements (such as weatherization efforts) and many public utilities may be exempt all together. The House Energy and Commerce Committee produced legislation that is not much better, passing a renewable energy standard of 20% by 2020 where up to 40% of the requirement may be covered by efficiency measures.

While reducing energy use through efficiency measures is obviously beneficial, it shouldn’t come at the expense of renewable energy production. Neither the Senate nor the House proposals strive to reach the 20% Wind Solution by 2030 proposed by the Department of Energy.

Overall, these proposals do little to help create a robust, nation-wide standard for renewable energy. Marchant Wentworth of the Union of Concerned Scientists told the Associated Press that, after the exemptions and provisions in the proposals are taken into account, renewable requirements may be as low as eight or nine percent. Mark Sinclair of the Clean Energy States Alliance agrees, telling the AP that the proposed federal RES would mandate less renewable energy production by 2030 than would otherwise already occur under current RES laws in 29 states and the District of Columbia.

This blog recently examined the many benefits wrought by a strong national renewable electricity standard, such as the generation of “297,000 new domestic jobs, lower electricity and natural gas bills for consumers by $64.3 billion, and [the production of] $13.5 billion in new income for landowners leasing their land for renewable energy development.” The American Wind Energy Association (AWEA), along with other environmental groups, is continuing to lobby for the tougher standards.

Senator Robert Menendez from New Jersey warned that unless the RES is strengthened, the bill may lose Democratic support in the Senate. Menendez plans to amend the bill to include the 25% standard sought by the President once it reaches the Senate floor for debate. However, he is unsure whether the tougher standard would still garner enough Republican support to be passed.

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