Feds blow hot and cold in support for wind power

By LEE BOWMAN
Scripps Howard News Service
Tuesday, October 02, 2007

Anyone who flies a kite or hits a golf ball knows breezes can be fickle.

So consider how difficult it can be to make a living from the wind.

Today's giant wind turbines, scientifically tuned to catch every zephyr, can generate power about 60 percent to 80 percent of the time, experts say.

Yet compared to the federal government's policies supporting wind power during this decade, the wind seems the soul of consistency. Since 1999, a key subsidy has been available to wind-power developers just two out of every three years, allowed to expire repeatedly during larger congressional disputes over energy and tax policies.

Critics say the on-again, off-again availability of federal tax credits for renewable-energy production created a boom-bust cycle for an industry that should have thrived steadily.

They argue wind could easily provide 20 percent of the nation's electric-energy needs. Right now, wind power contributes only about a half of 1 percent of the country's electricity.

"You can't go to the bank with the production credit unless it's going to be around for a while. You see projects soar one year when it's renewed, then the market collapses when the credit expires," said March Wentworth, an energy-policy analyst with the Union of Concerned Scientists in Washington. "Developers need a longer planning horizon than a year or two to be able to put up steel."

With the tax credits -- worth nearly 2 cents for every kilowatt-hour a utility-grade wind turbine generates -- extended through 2008 as part of a massive budget deal reached in Congress late last year, wind is booming again. Generating capacity increased by better than a quarter last year, and is expected to do so again this year.

The average commercial-grade turbine sitting atop a tower several hundred feet off the ground and with high-tech plastic blades extending more than the length of a football field costs $2 million or so to build. A 2-megawatt turbine, operating at 30 percent capacity, would generate 5.25 million kilowatt-hours a year, or about enough juice to run 500 average households.

The federal tax credit gives the owner 1.9 cents for each kilowatt-hour generated, or about $100,000 a year for the average turbine in the United States, for 10 years. The credit covers about a third of the initial investment, making the cost per kilowatt-hour just 4 to 7 cents, competitive in most markets with electricity produced from coal or natural gas.

Even this much stability, coupled with a growing movement in many states to require that utilities generate or buy more green power, has made wind generating and, to a lesser extent, the manufacturing of turbine components, two of the faster-growing sectors of the nation's energy industry.

One of the world's biggest turbine makers, Vestas Blades of Denmark, announced earlier this year that it is building a facility outside Denver to build the giant blades that catch the wind. The facility is expected to employ more than 400.

"They might have done that five years ago, but for the uncertainty of long-term U.S. policy toward wind and other renewable sources," said Randall Swisher, executive director of the American Wind Energy Association.

Still, Swisher says that in the 20 years he's headed the association, "at no other time have I seen the level of political support we're seeing for wind in Washington and in the states that we're seeing in 2007."

President Bush, calling for greater energy independence last year, said, "I recognize the importance of wind power ... It's possible we could generate up to 20 percent of our electricity needs through wind."

Congress so far this year has given mixed signals on support for wind energy. In June, the Senate rejected both a 10-year extension of the renewable-energy tax credit and a national 15 percent renewable-electricity standard for utilities.

But in August, the House approved the tax-credit extension, funded mainly by higher taxes and reduced credits for the oil and gas industry. The House also approved a 15 percent renewable-energy standard, but with a loophole that lets utilities cover up to 4 percent of that requirement through conservation measures.

House and Senate negotiators must work out those and other differences in the two energy bills this fall.

Already, 21 states and the District of Columbia have some renewable standards for power generators, "but there really needs to be a national system to ensure there is a sustained market for wind and other renewable energy at the front end. That will encourage investment not just in generation, but building capacity in this country to make the equipment," said Wentworth of the UCS.

An analysis by the organization projected that a national 20 percent renewable portfolio standard would create more than 300,000 American jobs by 2020.

Farm windmills and pumps made in this country helped homesteaders settle much of the dry middle of the United States in the last century, but today, Denmark, Germany and Japan lead the world in selling advanced wind technology.

"They're leaders because they have strong government programs," Wentworth said. "But a little encouragement works here, too. It's no accident that within a year of Pennsylvania adopting renewable standards for power, the Spanish wind-turbine manufacturer Gamesa Corp. set up a headquarters and started building production facilities in several parts of the state the next year."