By Carl Levesque, Clean Energy Communications Consultant
Wind energy, mainstream in the United States for many years and still on a steep growth curve, has a new source of appeal. Over the past five years, its cost has dropped an impressive 58 percent, according to the September 2014 report, “Lazard’s Levelized Cost of Energy Analysis.”
As a result of continued technological improvement and domestic manufacturing, Wind has become one of the most affordable sources of electricity today in the U.S., and one of utilities’ leading choices for new generation. Since 2008, over $100 billion in private investment has flowed into the U.S. Wind industry making it a major economic contributor.
In 2014, the U.S. Wind industry installed over four-times-more new wind energy than in 2013 across 19 states. The new installations mean that there is now enough wind power installed to power about 18 million average American homes.
Texas led the way for new wind capacity in 2014, followed by Oklahoma, Iowa, Washington and Colorado.
American wind power now supports well-paying manufacturing jobs at over 500 manufacturing facilities in 43 states, and an average of 73,000 total jobs over the past five years. Investment in new U.S. wind farms has driven an average of $12 billion a year in private investment over the last five years. Wind farms deliver over $180 million a year in lease payments to landowners such as farmers, with over 98 percent located on private land.
Calls for Stable Policy
Policy drives the energy sector, with virtually all U.S. technologies receiving policy support of some kind. Wind energy’s rapid advance in the U.S. is impressive when considering the unstable policy environment in which it has been forced to operate. The federal Production Tax Credit (PTC), the primary federal incentive for wind energy, has operated under short-term extensions of usually one and two years (the alternative Investment Tax Credit, relied on by offshore and community wind developers, has faced similar short-term extensions). Congress has allowed the PTC, which provides up-front tax relief of 2.3 cents per kilowatt-hour for the first 10 years of a project, to expire several times in recent history. While the credit has been key in spurring technological advances that have driven down the cost of wind, the expirations and related uncertainty have created a boom-bust cycle for the industry.
Perhaps the best indication of what the industry is capable of doing in a stable policy environment is its dramatic growth between 2005 and 2012, the longest stretch to date during which Congress did not allow the PTC to expire. American wind power saw 800 percent growth over the period, and average annual growth of 31 percent. Total investment in new wind farms reached $105 billion, and a vast majority of all wind power capacity in the U.S. today was installed.
Outlook for 2015 and Beyond
The U.S. Wind industry will be busy in 2015 with construction on wind farms occurring in 22 states at the start of the year. Texas actually has more capacity under construction than is installed in any other state. Other highly-active states include Oklahoma, Kansas, North Dakota, New Mexico, and Maine.
Meanwhile, utilities and others continue to sign some of the lowest cost long-term contracts ever seen for wind energy. These power purchase agreements (PPAs) include non-utility purchasers such as Google, Microsoft, Walmart, Yahoo! and Amazon, who are turning to wind energy to provide stably priced electricity for their power-hungry data centers.
Utilities continue to highlight wind’s ability to keep costs low for consumers. “When viewed as a package, our wind and solar contracts are expected to save LES customer-owners approximately $429 million over the next 25 years,” said Kevin Wailes, administrator and CEO of Nebraska-based Lincoln Electric System (LES), in announcing a power purchase agreement for wind energy.
After signing a wind PPA, investor-owned utility Westar similarly noted the “good news that we can rely on wind resources to provide energy at competitive prices.”
The affordability of wind helps consumers too. Wind power saved consumers $1 billion over just two days across the Great Lakes and Mid-Atlantic states during the 2014 “Polar Vortex” event, according to a new AWEA white paper. A May 2013 Synapse Energy Economics report found that doubling the use of wind energy just in that region would save customers close to $7 billion a year.
Aside from cost competitiveness and construction, 2015 promises to be notable for another reason. American offshore wind energy at last is on the verge of becoming reality, bringing an energy source familiar in Europe to the U.S. for the first time. Projects have been proposed in both state and federal waters off the Atlantic and Pacific coasts, as well as in the Great Lakes and the Gulf of Mexico, and in fact construction will start on the first U.S. offshore wind project this year.
A Vision for the Industry
An important development in 2014 came when the U.S. Department of Energy previewed its pending Wind Vision report. Slated to be released this year, it states that U.S. wind energy capacity can double by 2020, and provide 10 percent of America’s electricity—and then double again by 2030, to 20 percent of the grid. It projects that by 2050, wind can provide as much as 35 percent of the nation’s electricity.
The Wind Vision becomes all the more compelling when considering that the American industry is on pace so far to meet the 2030 goal, as outlined in an initial report produced by the George W. Bush administration in 2008. The vision is already becoming reality.
The U.S. Environmental Protection Agency (EPA)’s proposed Clean Power Plan also is a strong signal that America needs wind power. In meeting the landmark rule to limit carbon pollution from existing power plants, many states will find wind energy to be one of the biggest, fastest, cheapest ways to comply. As shown by the 2014 Lazard report, wind is by far the most cost-effective generation option for reducing pollution. Current wind power installed avoids the carbon pollution of over 28 million cars.
One benefit that often goes unnoticed is the water saving from using wind energy—a key advantage in drought-prone parts of the U.S. Droughts from the Southeast to the West Coast have highlighted our dependence on fresh water. The 2008 DOE report showing the feasibility of reaching 20 percent wind by 2030 found that would save 4 trillion gallons of water, more than the annual consumption of 9 million Americans. This advantage of wind power helps keep the lights on during heat waves.
In today’s rapidly shifting U.S. environmental and energy policy landscape, an important goal of the wind industry is an extension of the PTC and a policy framework that appropriately values its attributes, including zero-emissions power with no water use. A policy environment that values such attributes will free the industry to realize the Wind Vision outlined by the U.S. Department of Energy—reaching 20 percent by 2030 while saving consumers money.
AWEA is the national trade association of the U.S. America’s wind energy industry, with 1,300 member companies, including global leaders in wind power and energy development, wind turbine manufacturing, component and service suppliers, and the world’s largest wind power trade show, the AWEA WINDPOWER Conference & Exhibition, which takes place next in Orlando, FL, May 18-21, 2015. AWEA is the voice of wind energy in the U.S., promoting renewable energy to power a cleaner, stronger America.