Industry installed more generation from wind last year than from any other power source

Source: Nick Juliano, E&E reporter • Posted: Thursday, January 31, 2013

The last three months of 2012 saw a record number of wind projects come online, even as construction of new wind farms ground to a halt amid uncertainty over whether a key tax break would be extended, the industry said in a report released yesterday.

Wind was the No. 1 source of new generation installed last year, surpassing even natural gas, with 13,124 megawatts brought online, according to the American Wind Energy Association’s fourth-quarter report. The bulk of installations — 8,380 MW — came online between October and December, more than doubling the previous three-month installation record in the fourth quarter of 2009.

Developers were racing to bring projects online amid the then-looming expiration of the production tax credit, which provides $22 for every megawatt-hour of electricity a turbine generates and is vital to making wind farms economical to operate. The credit won an eleventh-hour extension earlier this month as part of a broader “fiscal cliff” deal.

The extension also changed the requirements for the credit, allowing projects that begin construction before the end of this year to qualify; previously, projects had to be placed into service to qualify. Before the change, developers were unwilling to begin constructing new turbines without knowing whether they could finish a project before the deadline.

AWEA’s report demonstrates the effect of that, showing almost no new construction was started after June of last year. The changed language was a key focus of the industry’s lobbying campaign last year and provides enough certainty for developers and utilities to move forward with projects this year, although the industry is eagerly awaiting detailed guidance from the Internal Revenue Service and the Treasury Department on how the law will be interpreted.

“Projects into 2014 can qualify, and that’s critical for the business timelines of the industry,” said Rob Gramlich, AWEA’s interim CEO.

The projects installed last year created about $25 billion in economic activity and brought total U.S. installations above 60,000 MW, enough to power 14.7 million homes.

The report also shows a growing customer base for wind among utilities, with 66 purchasing wind power, up from 42 in 2011, Gramlich said during a Web-based seminar yesterday.

“Utilities have become increasingly comfortable with wind as part of a balanced generating portfolio,” he said.