TODAY’S STUDY: WIND CASE STUDY – OHIO

Wind Energy For A Cleaner America II; Wind Energy’s Growing Benefits for Our Environment and Our Health

Fall 2013 (Environment Ohio)

Executive Summary

Burning fossil fuels to generate electricity pollutes our air, contributes to global warming, and consumes vast amounts of water—harming our rivers and lakes and leaving less water for other uses. In contrast, wind energy produces no air pollution, makes no contribution to global warming, and uses no water.

America’s wind power capacity has quadrupled in the last five years and wind energy now generates as much electricity as is used every year in Georgia. Thanks to wind energy, America uses less water for power plants and produces less climate-altering carbon pollution.

Wind energy displaced about 84.7 million metric tons of carbon dioxide emissions in 2012—more global warming-inducing carbon dioxide pollution than is produced annually in Massachusetts, Maryland, South Carolina or Washington state. Wind energy also saves enough water nationwide to meet the domestic water needs of more than a million people.

America has vast wind energy resources, and there is still plenty of room for growth. But the pending expiration of the federal renewable energy production tax credit and investment tax credit threatens the future expansion of wind power. To protect the environment, federal and state governments should continue and expand policies that support wind energy. Wind energy is on the rise in the United States.

click to enlarge

-Electricity generated with wind power quadrupled in the last #ve years, from about 34,500 gigawatt-hours (GWh) in 2007 to more than 140,000 GWh at the end of 2012—or as much electricity as is used each year in Georgia. (See Figure ES-1.)

-Wind energy was the largest source of new electricity capacity added to the grid in 2012.

-Nine states now have enough wind turbines to supply 12 percent or more of their annual electricity needs in an average year, with Iowa, South Dakota and Kansas now possessing enough wind turbines to supply more than 20 percent of their annual electricity needs.

click to enlarge

p> By displacing dirty electricity from fossil fuel-fired power plants, wind energy saves water and reduces pollution. In 2012, wind energy helped the United States:

-Avoid 84.7 million metric tons of carbon dioxide pollution—or as much pollution as is produced by more than 17 million of today’s passenger vehicles in a year. Fossil fuel-fired power plants are the nation’s largest source of carbon dioxide, the leading global warming pollutant. In the United States, warmer temperatures caused by global warming have already increased the frequency and severity of heat waves and heavy downpours, resulting in more intense wildfires, foods, droughts, and tropical storms and hurricanes.

-Save enough water to supply the annual domestic water needs of more than a million people. Power plants use water for cooling, reducing the amount of water available for irrigation, wildlife, recreation or domestic use. More water is withdrawn from U.S. lakes, rivers, streams and aquifers for the purpose of cooling power plants than for any other purpose.

-Avoid 79,600 tons of nitrogen oxide (NOX) and 98,400 tons of sulfur dioxide emissions. Nitrogen oxides are a key ingredient of smog, which contributes to asthma and other respiratory problems; power plants are responsible for about 15 percent of the nation’s total nitrogen oxide (NOX) pollution each year. Power plants also produce about 60 percent of all sulfur dioxide pollution, which contributes to acid rain. Finally, coal-fired power plants emit heavy metals such as mercury, a potent neurotoxicant that can cause developmental and neurological disorders in babies and children. Nearly two-thirds of all airborne mercury pollution in the United States in 2010 came from the smokestacks of coal-fired power plants.

click to enlarge

If America were to continue to add onshore wind capacity at the rate it did from 2007 to 2012, and take the first steps toward development of its massive potential for offshore wind, by 2018 wind energy will be delivering the following benefits:

-Averting a total of 157 million metric tons of carbon dioxide pollution annually—or more carbon dioxide pollution than was produced by Georgia, Michigan or New York in 2011.

-Saving enough water to supply the annual domestic water needs of 2.1 million people—roughly as many people as live in the city of Houston and more than live in Philadelphia, Phoenix or San Diego.

-Averting more than 121,000 tons of smog-forming nitrogen oxide pollution and 194,000 tons of sulfur dioxide pollution each year.

click to enlarge

Wind energy’s success in reducing air pollution and saving water will continue to grow if America makes a stable, long-term commitment to clean energy at the local, state and national levels. Specific policies that are essential to the development of wind energy include:

-The federal renewable energy production tax credit (PTC) and investment tax credit (ITC). The PTC provides an income tax credit of 2.3 cents per kilowatt-hour (kWh) for utility-scale wind energy producers for 10 years, while the ITC covers up to 30 percent of the capital cost of new renewable energy investments. Wind energy developers can take one of the two credits, which help reduce the #nancial risk of renewable energy investments and create new #nancing opportunities for wind energy. Both the ITC and the PTC, however, are scheduled to expire at the end of 2013.

-Strong renewable electricity standards. A strong renewable electricity standard (RES) helps support wind energy development by requiring utilities to obtain a percentage of the electricity they provide to consumers from renewable sources. These standards help ensure that wind energy producers have a market for the electricity they generate and protect consumers from the sharp swings in energy prices that accompany over-reliance on fossil fuels. Today, 29 states have renewable electricity standards—other states and the federal government should follow their lead.

-Continued coordination and collaboration between state and federal agencies to expedite siting of o"shore wind facilities in areas that avoid environmental harm…

click to enlarge

America Should Continue to Invest in Wind Energy

America’s clean energy boom is no accident. It is the direct result of strong, forward-thinking policies adopted over the last decade at both the state and federal levels, policies that have unleashed the energy of innovative companies and American workers to fuel dramatic growth in renewable energy. As wind energy and other forms of clean, renewable energy take root in the United States—delivering ample bene#ts for our environment and economy—now is not the time to turn our back on further progress. To further reduce global warming pollution, curb smog and soot, move away from fossil fuels, save water, and grow our economy, the United States should make a long-term commitment to renewable energy with policies to support growth of the wind industry.

click to enlarge

Federal Tax Incentives

Two of the most important tools that have helped grow the wind industry in the United States are the federal renewable electricity production tax credit (PTC) and the investment tax credit (ITC).

Policies such as the PTC and ITC recognize that renewable energy is a key component of an electricity grid that is not only cleaner but that also delivers stable, reasonable prices for consumers. Renewable energy sources such as wind are not subject to the fuel price volatility of coal and natural gas, and can deliver reliable, affordable electricity for decades, making them a smart long-term investment in the nation’s energy future. However, renewable energy projects are often capital intensive. Unlike fossil fuel power plants, for which fuel costs represent a significant share of the overall cost of producing power, the vast majority of the costs of building a wind turbine or installing a solar panel are incurred before the first kilowatt-hour of electricity is produced. Public policies that defray some of those initial capital costs, or that help assure a reliable rate of return over the long term, can reduce the risk for investors—opening the floodgates for investment and the rapid expansion of renewable energy.

The PTC provides an income tax credit of 2.3 cents per kilowatt-hour (kWh) for utility-scale wind energy producers. It is available for electricity generated during the first 10 years of the wind farm’s operation. After expiring at the end of 2012, the PTC was renewed in January 2013 and will be available for all projects that begin construction on or before December 31, 2013.

The investment tax credit (ITC) covers up to 30 percent of the capital cost of new renewable energy investments, with the credit becoming available the moment the wind energy system is placed into service. The ITC also expires on December 31, 2013.

click to enlarge

Wind energy developers and other builders of renewable energy systems may choose to take advantage of either the PTC or the ITC, but not both. Different types of renewable energy projects stand to reap greater bene#ts from one or the other program, depending in part on the capital intensity of the project and the amount of power it produces over time. Federal renewable energy tax credits have been a key contributor to the growth of wind energy over the last decade, but their effectiveness has been hamstrung by their “here today, gone tomorrow” inconsistency. Over the past 13 years, the renewable energy PTC has been available only sporadically. When the PTC has been renewed by Congress for only for one or two years at a time or even allowed to expire, the ensuing uncertainty has discouraged wind developers from building new capacity, stunting industry growth. For instance, in 2000, 2002 and 2004—years when the PTC was allowed to expire temporarily—new wind installations dropped by 93 percent, 73 percent and 77 percent, respectively, from the previous year when the PTC had been in force. (See Figure 8.)

The economic uncertainty created by the sporadic availability of incentives discourages businesses that manufacture turbines, gear boxes, blades, bearings and towers from entering the market or expanding, restricting the supply chain and increasing costs. On the other hand, long-term term consistency in renewable energy policy can encourage new businesses to enter the field and expand operations, bringing new jobs and investment to the United States. For example, between 2005-2006 and 2012—a period of relative stability in clean energy incentives—the amount of domestically produced content in U.S. wind power projects increased from 25 percent to 72 percent, creating new jobs and economic opportunity in the United States.

click to enlarge

Establish Strong Renewable Electricity Standards

A renewable electricity standard (RES) helps support wind energy development by requiring utilities to obtain a percentage of the electricity they provide to consumers from renewable sources. These standards help ensure that wind energy producers have a market for the electricity they generate, as electricity suppliers seek to reach their required threshold for renewable electricity. This certainty makes it easier for wind developers to finance and build new wind power installations. Today, 29 states have renewable electricity standards. From 1999 through 2012, 69 percent of all new wind capacity was built in states with renewable electricity standards. In 2012, the proportion rose to 83 percent. (Some of the states with the strongest standards, such as Colorado, have seen the greatest growth in wind power generation.

Renewable electricity standards have not only proven to be effective at spurring wind energy development, but they have also had little effect on ratepayers, with most policies resulting in either a small net benefit or a small cost to ratepayers on the order of $5 per year. This does not include the economic value of the environmental and public health benefits of renewable energy, nor does it reflect the economic benefits of wind energy-driven job creation, leading to the conclusion that renewable electricity standards are a winner for both the environment and the economy.

In order for RES policies to continue to drive wind energy growth, however, states without RESs will need to adopt them, those with policies will need to strengthen them, and the federal government will need to adopt a national policy of its own. According to the U.S. Department of Energy, existing state RESs will drive the addition of only 3 to 5 GW of renewable energy per year between now and the end of the decade, which is lower than the amount of wind energy added in recent years. Strengthening the nation’s renewable energy goals will help keep the United States on pace to tap an increasing share of its wind energy potential.

click to enlarge

Facilitate Development of Offshore Wind Resources

Some of the best wind energy resources are offshore. To capture that potential, policymakers need to set a bold goal for offshore wind development in the Atlantic. A goal will help articulate the important role of offshore wind in America’s energy future. The Department of the Interior and the Bureau of Ocean Energy Management will need sufficient staff and resources to manage multiple renewable energy leases along the coast and to promote an efficient leasing process. A coordinated effort by federal, state and regional economic development, energy and commerce agencies is needed to develop commitments to purchase offshore wind power. Finally, offshore wind projects must be sited, constructed and operaed responsibly in order to avoid and mitigate conflict with local marine life and other uses.

Tweet