WIND FOR THE COMING DECADE (WITH A 10-YEAR PTC)

A decade of new wind energy investment will grow jobs and renewable energy
Congressman Kevin McCarthy, march 31, 2009 (Kern Valley Sun)
and
Paving way for decade of wind industry growth
Tina Forde, March 30, 2009 (Tehachapi News)

SUMMARY
Wind Incentives for a New Decade Energy Act of 2009 (WIND-E-A 2009, H.R. 1743), a newly introduced bill sponsored by Congressman Kevin McCarthy (R-Calif), would extend wind energy’s production tax credit (PTC) for 10 years.

Congressman McCarthy publicly announced his legislation at the inauguration of 8 new Oak Creek Energy-built wind turbines added to the Tehachapi Pass installation in McCarthy’s home district. The new trubines will provide California Portland Cement in nearby Mojave, Calif., with 35% of its yearly power. The emissions-free electricity produced by the turbines will save the company $2 million a year. Cement manufacturing is among the most energy-intensive, greenhouse gas (GhG) emissions-intensive industries.

Until a 3-year extension of the PTC was attached to stimulus legislation passed last October, the wind industry's tax credit had never been made available to project builders for longer than 1 year at a time since it was first offered by Congress in 1992. It was, on several occasions, temporarily canceled.

Instability in the PTC’s availability led to a “boom-and-bust cycle” with a rising and falling off of growth each time the credit was cut off for political reasons. The first time, in 2000, new installed capacity dropped 93%; in 2002, new installed capacity dropped 73%; in 2004, it dropped 77%.

The sad, true story of the PTC. (click to enlarge)

What long term stability allows wind power producers to do: (1) Attract investors; (2) plan schedules; (3) create good-paying jobs with benefits that attract high-quality, career-minded employees; (4) generate a domestic wind turbine manufacturing base and a variety of component-manufacturing sub-industries with more jobs and revenues.

Wind industry insiders are behind Congressman McCarthy and cite a 2007 Department of Energy study that found a 5-to-10 year extension of the PTC would reduce the cost of wind power-generated electricity 15%.

In 2008, the wind industry’s direct job count reached 85,000, surpassing the number of people employed by the coal industry. There are tens of thousands more indirect jobs from wind. Wind-generated electricity also displaced 28+ million tons of greenhouse gas emissions in 2008.

Stability means growth amd growth means jobs. (click to enlarge)

COMMENTARY
Proposing this bill is an incredibly astute political move by Congressman McCarthy, a Republican. It has the dual virtues of aligning him squarely with the Obama administration’s New Energy advocacy without alienating his Republican colleagues who – perhaps thanks to its lucrative role in Bush country (Texas) – also support wind.

At the same time, the legislation makes McCarthy a hero with his Tehachapi Pass-region constituents. The Tehachapi Wind Resources Area, in McCarthy’s district, already has 3,500+ wind turbines producing enough electricity to power 250,000+ homes and providing 650+ direct and indirect jobs. Kern County produces 30+% of California’s wind, which is 5% of U.S. installed capacity. Estimates suggest the district could readily add another 6,000 megawatts, enough to power 1 million+ more homes.

McCarthy has allies in the Texas and Iowa delegations with whom he plans to work to push his bill through. He will also have to reckon with Speaker of the House of Representatives Nancy Pelosi (D-Calif) and a powerful Democratic leadership led by Energy and Commerce Committee Chairman Henry Waxman (D-Calif).

Stability means growth amd growth means enmissions reductions. (click to enlarge)

Unlike the U.S.'s reliance solely on tax credits and state and local measures as incentives, most nations that seek to spur higher levels of New Energy capacity use a variety of subsidies and incentives to drive growth. Internationally, the most successful tool has been the feed-in tariff (FiT), through which New Energy builders earn a guaranteed, above-market rate per kilowatt-hour produced over a long-term period of 10-to-20 years.

A Renewable Electricity Standard (RES) requiring utilities to obtain a fixed portion of their power from New Energy sources has also been effective at driving growth in the nations and states where it has been used.

President Obama has opened the field to new possiblities by his courageously unwavering stated commitment to doubling U.S. New Energy capacity in the next 3 years. A national RES, GhG-cutting measures including a national cap&trade system, a national energy efficiency standard, new fuel efficiency standards and, yes, a long-term extension of the PTC are all on the table.

The predictions are promising but performance is proof. (click to enlarge)

QUOTES
- Congressman McCarthy: “The Act will extend the production tax credit for a decade to stabilize the business climate…The stop and start on the tax credit has hurt the business…uncertainty in this process is a major disincentive to long-term wind and renewable energy development.”
- Linda Parker, executive director, Kern Wind Energy Association: “This is another piece of the pie to make it more efficient…We need this legislation. We need this to grow. We need this stability.”
- Hal Romanowitz, president, Oak Creek Energy Systems: “The legislation produces 15 percent of the economic value of a project…It's the difference between a project being profitable and not. Without the tax credit a project will lose money.”
- Randy Hoyle, Terra-Gen Power: “Adopting a tax credit provides a favorable environment so investment is possible in the future…”

Stability means growth amd growth means revenues. (click to enlarge)

- Bruce Shafer, plant manager, Oak Creek Energy Systems: “We are the poster child of cooperation and innovation…We have an energy-intensive industry and we are reducing our carbon footprint.”
- Congressman McCarthy: “Our country has the opportunity to move forward with solutions to increase production of all American energy resources…The WIND Energy Act is a component of that strategy by extending the production tax credit (PTC) over the next decade to create new jobs and power America with clean energy by making wind energy projects more affordable…The WIND Energy Act is a common-sense idea that we can work together as Americans to help move our nation forward. Now is the time for Congress to answer the call of millions of Americans and take decisive action so that we can strengthen our future – a new decade for America that is powered by clean and renewable energy.”