Governors' Wind Energy Coalition

The U.S. wind industry is entering cautiously optimistic ground after a slow start to the year (ClimateWire, May 1) with its best second quarter ever and Senate approval of an on-again, off-again tax credit.

Wind companies added about 1,660 megawatts of new power to the U.S. grid this quarter, according to the latest quarterly report released Wednesday by the trade group American Wind Energy Association (AWEA).

In the first half of 2015, new installations of wind energy projects represented nearly 2,000 MW. That more than doubled the capacity installed in the same period last year, but still fell short of record 2012 growth.

Second-quarter results trickling in from wind companies appeared to fit the trend. General Electric Co. reported in an earning call a 25 percent increase in orders of its wind turbines to 888 from the same period last year.

The number of wind energy projects in the pipeline is also flirting with the all-time record. About 13,600 MW of projects are under construction, primarily in Texas and Midwestern states. As of now, the country has 67,870 MW of installed wind capacity and more than 49,000 wind turbines.

States in the Southeast jumped on the bandwagon, too, with several new commitments. Florida and Arkansas utilities signed power purchase agreements for 180 and 108 MW, respectively. This month, Bilbao, Spain-based utility company Iberdrola SA announced it will begin construction on the first commercial-scale wind farm in North Carolina, which will generate 208 MW. The output from the site will go to Amazon Web Services to power its data centers.

The Internet company has vowed to work toward using only renewable energy in its operations. The vice president of infrastructure at Amazon Web Services, Jerry Hunter, stated the North Carolina wind farm puts it on track to surpass its goal of 40 percent renewable energy by the end of the year.

Other technology companies have also partnered with wind firms to power their data centers. Facebook Inc. will power its new data center in Texas entirely with a 200-MW wind plant there. Hewlett-Packard Co. said this week it had signed a 112-MW power purchase agreement with a planned wind farm in Texas for its own data centers there.

‘A big step in the right direction’

Earlier this week, the Senate voted to extend incentives for renewable energy through 2016 (E&ENews PM, July 21). The production tax credit (PTC) has received criticism for its costliness for many years. It gives wind energy developers 2.3 cents per kilowatt-hour for the first 10 years of a wind farm’s life (Greenwire, May 27).

Congress periodically lets the incentive expire, only to breathe life back into it another year. It had last expired at the end of 2014.

“This is a big step in the right direction,” Tom Kiernan, CEO of AWEA, said in a statement.

Sen. Chuck Grassley (R-Iowa) has been a strong supporter of the tax credit. In a letter he wrote to Senate Finance Chairman Orrin Hatch (R-Utah), he called what happened to renewables when Congress doesn’t extend incentives a “boom and bust cycle.”

Installed wind capacity has fallen more than three-quarters each year after Congress let the PTC expire, according to an analysis by the Union of Concerned Scientists. In 2013, the tax credits had briefly expired. That year, the wind industry struggled, with installations of new wind farms falling 92 percent. That corresponded to a loss of 30,000 jobs across the industry, according to AWEA.

Iberdrola cut some of its American staff at the time, citing “low energy prices, a poor economy and regulatory uncertainty,” according to an interview spokeswoman Jan Johnson gave to North American Windpower.

This quarter, the company appeared shielded from the ups and downs of the American incentives system. In an earnings call, Chairman and CEO Ignacio Galán said its current wind farms in the United States “are more than covered with existing PTCs.”

Extension of the incentives could “give the opportunity to … these projects we have already in our pipeline to continue already making a new investment in the sector,” he added.

Wind industry analysts warned against premature celebration.

“Uncertainty around federal tax policy clouds the outlook for new growth and could result in the industry being forced off another cliff,” Hannah Hunt, a research analyst for AWEA, said in a statement.

The House appears to be in no rush to vote on the tax extenders package before the August recess (E&E Daily, July 22).