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Slow Pace of Congressional Action on Tax Credit The balance of 2004 looks like a difficult period for the U.S. wind energy industry, according to the American Wind Energy Association (AWEA). AWEA said today that it is forecasting little to no growth in installed wind generating capacity this year, compared with a near-record 1,687 megawatts (MW) (enough to serve nearly 500,000 homes) of new capacity installed in 2003. The reason for the drastic fall-off? The inability of the U.S. Congress to pass a timely extension of the federal wind energy Production Tax Credit (PTC), which expired Dec. 31, 2003. On May 11, the Senate passed legislation containing a three-year extension of the credit, to December 31, 2006. However, that legislation must still be approved by the House of Representatives and a Senate-House conference committee before it is ready to be signed into law. AWEA now projects that new 2004 installations will be less than 500 MW. It warned that the number is dropping daily and will continue to drop until Congress extends the PTC. Wind power plant developers require at least six months of lead time to arrange for the purchase of equipment, obtain permits, and arrange for the financing and construction. The longer an extension is delayed, the less likely a project can be completed before year's end. “Congress must act quickly to extend the PTC so thousands of people in the wind industry can get back to work," said Legislative Director Jaime Steve. “There are many wind projects throughout the country ready to move forward that will create jobs, spur significant rural economic development, and produce clean, emission-free electricity for consumers,” Steve added. With the PTC, wind power is now in an increasingly competitive range with other generation sources, and the cost of wind-generated electricity is not affected by fuel price volatility. Unlike natural gas, wind energy costs are predictable over time: once a plant is built, the cost of producing electricity is stable and the fuel source is free. “The modern wind industry was born in the U.S., but our early technology lead was squandered with the lack of a consistent policy environment in the U.S. Today, a wide range of U.S. companies are interested in the wind industry, but many are staying on the sidelines because of the on-again, off-again nature of the market produced by frequent expirations of the PTC,” said Randall Swisher, AWEA’s Executive Director. The nearly 1,700 MW of new wind power installed by the wind industry last year brought $2 billion of new investment to rural areas of the country. Most industry participants predicted that 2004 could have been an even better year than 2003 had the PTC not expired. According to AWEA, the U.S. could easily install 2,000 MW of new wind power per year in the short term. The damage to the industry affects companies all along the supply chain: fiberglass manufacturers that make wind turbine blades; makers of other components such as towers, generators, and gearboxes; trucking companies that haul turbines and other equipment to new wind farm sites; and many more. If the wind industry were to consistently grow at a rate of 18% per year, AWEA said, six percent of the nation's electricity could be generated by wind power by the year 2020, resulting in over $100 billion of investment in rural America. Over the last five years, U.S. wind capacity has expanded at an annual average rate of 28%, showing that the supply chain can ramp up quickly to meet the nation’s power needs. Without a PTC extension, however, the U.S. will likely see very few new installations this year. U.S. Wind Capacity (in MW)
### AWEA, formed in 1974, is the national trade association of the U.S. wind energy industry. The association’s membership includes turbine manufacturers, wind project developers, utilities, academicians, and interested individuals. More information on wind energy is available at the AWEA web site: www.awea.org |
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©
2004 by the American Wind Energy Association. |
