Wind Industry Calls on Congress to Boost Investor Confidence
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The wind industry has lately been the victim of a combination of Washington policy-making gridlock, a recession-related weakening of demand for energy, and the reluctance of banks to extend commercial credit. Although a record-breaking 10,000 megawatts of wind energy was added in the United States in 2009, the industry has recently been experiencing a dramatic slowdown, with only 395 megawatts of wind power added in the third quarter of 2010, the worst quarterly performance since the first quarter of 2007. This pushed industry performance down 72% in the first three quarters versus the same period a year ago.
What the industry needs now more than ever to boost investor confidence is a strong signal from national policy makers backing renewable power on a comprehensive and long-term basis. Thus far that signal has been weak on a national level. For example, truly coherent national policies enabling regional transmission building to bring wind energy from remote sources of supply to population centers has failed to materialize. So has an extension of the renewable energy tax credit, due to expire in December 2010. Because this subsidy offers a credit only to those renewable projects that source from domestic manufacturers, it has been credited with saving 40,000 jobs in the wind power industry alone.
Despite the lack of movement on these key measures, wind energy lobbyists are nonetheless cautiously optimistic as they look to the shift in the legislative and policy-making landscape created by the midterm elections. During a recent webinar, Denise Bode, CEO of the American Wind Energy Association, pointed out that many newly elected Senators—including the new Republican leader of the House, John Boehner, Mark Kirk of Illinois, Jerry Moran of Kansas, Chris Coons of Delaware, and Richard Blumenthal of Connecticut—have voiced strong support for national renewable energy policies. Another midterm election bright spot was the decision by the voters of California to defend their rigorous renewable portfolio standard.
Bode maintains that wind power advocates have a compelling story to tell to the new Republican members of Congress. She notes that wind is the fastest growing manufacturing sector in the country with 50% of all inputs now sourced domestically up from 25% five years ago. “Some of our windiest states are also red states in America’s heartland,” she reported.
However, Bode maintains it is time for Congress to level the playing field for renewables, noting that, according to a Government Accountability Office study, the fossil fuel industry enjoys five times the federal support of the renewables industry. Most troubling, she notes, is while the need for the US to shift to cleaner sources of fuel is almost universally acknowledged, in the past year the shift been in the opposite direction. For example, in 2008 wind represented 40 percent of new electricity capacity, natural gas 40 percent, and coal 13 percent. In 2009 40 percent of new electricity capacity came from coal versus 13 percent from wind.
To put teeth behind the push for clean energy and a shift away from “heritage fuels” the wind industry is lobbying for a national renewable energy standard. Thirty states have some form of renewable energy standard but, says Bode: “We need a uniform support that a national renewable energy standard would create. Policies like the extension of renewable tax credits and a national renewable electricity standard are what the industry needs to regain our position as a global leader. Without long-term policy our numbers will sink below 2007 levels as they did this quarter.”
–Susan Arterian Chang is a financial writer and is the content developer for Capital Institute.