Cai Steger, Energy Policy Analyst, New York, Center for Market Innovation
Here’s some good news that shouldn’t get buried amid the summer heat and beach vacations: 2012 was a banner year for American wind power. That’s thanks in large part to federal and state policies and incentives that prioritize clean energy and the jobs, public health and global-warming benefits that come with it.
So says the U.S. Department of Energy in its 2012 Wind Technologies Market Report, its seventh annual, released yesterday. In fact, the news that report contains is particularly impressive:
- Last year, wind power beat out even low-priced natural gas as the largest source of new electricity in the U.S., capturing 43 percent of all new electric capacity. That’s enough to power almost 4 million homes, and “particularly remarkable,” the report’s authors write, “given persistently low natural gas prices for the last year….”
- Nine states now get at least 12 percent of their electricity from wind power, and by year’s end, three of those states—Iowa, South Dakota and Kansas—got more than 20 percent. This is truly impressive growth for a traditionally slow-moving energy industry.
- Wind power jobs rose by 5,000, to more 80,000, despite layoffs attributed to what was profound uncertainty about the renewal of the federal Production Tax Credit. That tax credit helps level the playing field for new wind farms when they compete against conventional energy technologies—coal, gas, oil—that have received hundreds of billions of dollars in federal support over the last 100-plus years.
(image courtesy of new U.S. Department of Energy interactive map – go here to see the exponential growth of wind in the U.S. since 1975)
The DOE wind report tells us something else, too: Federal and state policies and incentives are central to continuing growth in this field, just as they have been in developing earlier energy technologies. “Various policy drivers at both the federal and state level have been important to the expansion of the wind power market in the United States,” the authors write. What’s more, uncertainty about the continuation of these policies, not only the embattled Production Tax Credit and the Investment Tax Credit, but also attacks on state renewable energy standards, creates additional hesitancy in the wind power market. That makes sense: As in any field, developers are less likely to jump in and banks less likely to lend when the market is unpredictable.
But back to the good news…
America led the world in new installed wind power capacity in 2012. (Though the US was an early leader in the field, China overtook us between 2009 and 2011.) Moreover, over the last five years, wind power has accounted for one quarter to nearly one half of all new U.S. electric capacity.
Wind power is also increasingly affordable, the DOE tells us. The price of turbines has decreased by 20-35 percent since late 2008. Last year, the installed price per kilowatt dropped more than 9 percent and is expected to fall even further in 2013. In several markets, wind power is now the least expensive option for new electric generation, bar none.
Increasingly wind power is American-made, too. In 2012, more than 70 percent of US wind power components were manufactured here, compared with only 25 percent in 2006-2007. That’s because as the U.S. wind power industry takes root, both US and foreign manufacturers set up shop here, close to their markets. And, while we were once a major importer of wind power technology, the US is now exporting our wind power components—to Canada, Brazil, Mexico, even China.
Along the way, state policies have had a big impact on wind power’s growth. In 2012, 83 percent of new wind farms were built in states with renewable energy standards, leveraging billions in private investment.
And there’s more good news: The US is not only on track to get 20 percent of its electricity from wind power by 2030, it’s ahead of schedule. More growth is expected in 2013 and 2014, thanks to the federal PTC extension which incentivizes new wind power projects that begin construction before January 1st, 2014. “But projections for 2015 and beyond are much less certain,” the report authors write. “Lack of clarity about the fate of federal tax incentives for wind energy is a primary source of this uncertainty.”
Things don’t have to be that way. Though the gridlock in Washington sometimes makes it hard to imagine, our nation’s elected representatives could take a good look at the benefits that federal and state wind power policies and incentives bring to us all. They could examine some of the numbers DOE reported yesterday—wind power supplies nearly 30 percent of Denmark’s electricity and 18 percent of Portugal’s and Spain’s—and they could start envisioning how this country could dominate the clean energy revolution.