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With wind, solar, and geothermal projects popping up with increasing frequency in the U.S., a recurring theme of obstruction is materializing. When it comes to development obstacles, all forms of renewable energy have one thing in common: a lack of transmission.

Inside Renewable Energy’s weekly podcast recently covered the issue that has been inhibiting renewable energy growth ever since its inception. Erik Swenson, a partner with the international law firm Fullbright and Jaworski dealing with energy and climate issues, provides commentary on the topic. Swenson describes the transmission problem as one of “federalism.” He believes that the government is good at seeing the big picture, “macro” necessity of creating a so-called green power super highway but fails to understand the smaller, “micro” complexities that must be overcome to accomplish the task. He cites the stimulus bill as a misfire for transmission projects:

“ARRA legislation is focused on shovel ready projects but it takes 7 to 10 years, roughly, to site a new transmission line. So, if you can’t start construction on your new transmission line within about the next year and complete it within about the 2016 timeframe then the money is not available to you… so it’s just not going to solve the problem of how to connect new geothermal, new solar, new offshore wave energy projects to the grid.”

The podcast, which also covers other renewable energy topics, can be heard in its entirety here.

Transmission has been a popular focus for the National Wind blog these days (see here and here) but it is an issue that encompasses more than just wind energy. We’re still hoping that Congress will recognize that and figure out how to handle the “micro” complexities in time to make a difference with the new energy bill.

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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.

In February, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (ARRA), perhaps better known simply as the stimulus bill. While the stimulus package includes a variety of conventional strategies to stimulate broad economic growth, the package also outlines a number of policies focused on stimulating emerging 21st century industries. Most notably for the wind industry, Obama’s stimulus package was drafted with a principle goal of doubling America’s renewable energy output in the next three years. The stimulus plan includes both funding and tax credit provisions that are intended to promote such growth.

The most direct provisions, and those that will likely have the greatest impact on wind energy development, are the changes to the tax credit provisions. The Production Tax Credit (PTC) has helped make the wind energy a lucrative industry for institutional investors who buy turbines and fund the construction of wind farms. The PTC reduces the investors’ tax liability by 2.1 cents/kWh produced each year for ten years. In recent years, the PTC has been extended for one year at a time, creating uncertainty near year’s end about whether the Congress would extend the credit for the following year. The three-year extension passed in the ARRA will reduce uncertainty and encourage stability and continued growth in the wind industry.

The ARRA also added wind energy developments onto the list of renewable energy developments that qualify for the Investment Tax Credit (ITC). Unlike the PTC, the ITC depends not on how much energy is produced by a wind farm, but on how much money was invested in it. The ITC reduces an investor’s tax liability by 30% of the investment in the wind energy facility and can be claimed immediately after the project starts operating.

Finally, the stimulus package added a provision to allow investors in renewable energy to convert their Investment Tax Credit into a grant. Instead of reducing tax liability, the grant (30% of the total investment, as for the ITC) will simply be disbursed after the project starts producing and delivering electricity. With a guaranteed 30% rebate on the investment as soon as wind turbines start operating, this grant provision should increase interest in wind energy development in the United States.

Less direct provisions of the American Recovery and Reinvestment Act will also have strong impacts on wind energy development. The Act pumps over $11 billion into funding and loan guarantees for electrical transmission projects that will increase both the efficiency and capacity of transmission across the country. The bulk of the funding will go to Smart Grid projects and projects that are being built specifically for the transmission of electricity from renewable sources. A fair share of the renewable energy related funding will also go towards the development of jobs and the training of new workers. Overall, the stimulus bill is expected to foster continued growth in the renewable energy industries despite the hard times being felt across most economic sectors.

Click below to listen to Leon, Steinberg, CEO of National Wind on Minnesota Public Radio, commenting on how wind companies like President-elect Obama’s New Energy Plan!

http://minnesota.publicradio.org/display/web/2008/11/12/obamaenergy_2008/

Barack Obama made history when he was elected to be the 44th President of the United States of America. He is not only the first African American president, but also armed with an aggressive plan for economic and environmental change. His plans aim to provide immediate relief to struggling families, while building an economy based on clean, renewable energy. Some of the key items in President-elect Obama and Vice President-elect Biden’s New Energy for America Plan promote green living by reducing our overseas oil dependence, expanding the production and investment in renewable energy resources, and creating jobs for millions of Americans.

Over the next ten years Obama and Biden plan to invest $150 billion in U.S. based green jobs. This will serve as an investment in America’s highly skilled workforce and in wind, biofuels, and low emissions coal manufacturing facilities. Plans to design a new digital electricity grid infrastructure will also create jobs. This investment is designed to help supply America with the tools it needs to lead the way in renewable energy production. By sponsoring more US based wind manufacturing facilities, Obama hopes to reduce our dependence on overseas oil and thereby increase energy security for our country.


Obama and Biden further propose to increase energy security by getting one million plug-in electric vehicles on the road by 2015. As a U.S. senator Obama has lead efforts to jumpstart federal investment in advanced hybrid electric vehicles that can get over 150 miles per gallon of gas. To electrify the market, the President-elect has proposed a $7,000 tax credit for the purchase of advanced technology vehicles as well as conversion tax credits. To promote this nascent technology, Obama and Biden will commit to setting a leadership example by converting the entire White House fleet into plug-in electric vehicles within their first year of office, as security permits. The President-elect also recommends that half of all cars purchased by the government be either plug-in electric or hybrid electric by 2012.

Barack Obama and Joe Biden also call for the establishment of a federal Renewable Portfolio Standard (RPS) to require that 10% of electricity used in the U.S. is derived from clean, sustainable energy sources, such as solar, wind, and geothermal energy production by 2012. This national requirement is intended to promote significant private sector investment in renewable sources and create thousands of American jobs, particularly in rural areas. Furthermore, the federal Production Tax Credit (PTC), currently set to expire at the end of 2009, will be renewed for 5 years under the Obama plan to encourage stable development of wind energy projects.

In order to achieve these renewable energy goals, Obama and Biden will have to pursue a major investment in an innovative method to transmit electricity and monitor its use. The current U.S. electrical grid requires expensive and lengthy upgrades to support renewable energy development. Adopting a national utility grid would provide the required capabilities to accommodate our 21st century energy requirements. This new “Smart Grid” will improve reliability and security, provide increased distributed storage, and be more affordable.

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