With Looming Loss Of Incentives, Declining Costs May Keep Wind Energy Afloat

January 3rd, 2013 BY VeganVerve | No Comments
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The United States has proven to be a world leader in recent renewable investments. In addition to investments, the increasing prevalence and success of the renewable energy sectors in the U.S. is largely attributed to government incentives. One such incentive, the production tax credit, has considerably boosted the wind industry. Many in the wind energy field have pointed to the incentive as being behind the growth of wind energy over the last decade.

The production tax credit is set to expire at the end of 2012. However, the production tax credit requires wind farms to be operational prior to the 2012 deadline, so with permits, construction and other slowdowns any wind farm not currently in the works is unlikely to benefit. The production tax credit gives wind farms 2.2 cents per kilowatt-hour of energy produced. This applies for the first ten years the wind farm is in production. The tax credit has been in existence since 1999 but has been renewed three times.

However, it is currently not looking like the production tax credit will be renewed, especially with the political climate in the U.S.. So with the looming expiration of the incentives and $45 billion in investments for 2011, the U.S. has seen considerable growth in the first half of 2012. Renewable energy and natural gas dominated the beginning of the year as coal generated power dwindled in popularity and growth.

The U.S. officially has more than 50 gigawatts of wind energy installed across the nation which is approximately equivalent to the energy needed to power 13 million U.S. homes. In the first quarter of 2012, the U.S. installed 1.695 gigawatts of wind energy. In the first two quarters of 2012, the U.S. has seen wind installations increase by 34 percent compared to 2011.

These figures may quickly change in 2013 due to the lack of governmental incentives. However, Bloomberg New Energy Finance recently reported good news for the wind industry. According to their report, maintenance and operations costs for turbines and wind farms are declining, which may allow companies and wind farms to stay afloat during times of declining governmental assistance.

The Bloomberg report indicated that costs of maintenance and repair have declined approximately eleven percent per year, with a total decline of thirty-eight percent in the last four. Costs are now $24,490 per megawatt of wind energy. These figures, however, only apply to onshore wind energy but as of now the U.S. has no offshore wind farms.

The CEO of Bloomberg New Energy Finance, Michael Liebreich, stated: “Wind power has done much to improve its competitiveness against gas-fired and coal-fired generation in recent years, via lower-cost, more technically advanced turbines, and more sophisticated siting and management of wind farms.”

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