by Phillip Brasher pbrasher@dmreg.com
Washington, D.C. – Construction of wind farms surged in Iowa and nationwide in 2009 after Congress included new financial incentives for the industry in the economic stimulus bill.
Industry officials say construction should continue relatively strong this year with the incentives still in effect. They say that long-term growth will hinge in part on whether Congress enacts a mandate for renewable energy and clears the way for new long-distance transmission lines.
The industry grew by 39 percent last year, adding 9,922 megawatts of generation capacity to exceed 35,000 megawatts nationwide, the American Wind Energy Association said in a report being issued today. About 4,040 megawatts of that new capacity came on line in the last three months of the year.
Iowa, which held on to its ranking as the No. 2 wind power producer, added 534 turbines in 2009 that can produce 879 megawatts. The majority – 393 – of those turbines, with a capacity of 618 megawatts, went on line in the fourth quarter.
Construction of new wind farms stalled in early 2009 after the meltdown on Wall Street and the freeze in the credit markets. Investment banks traditionally financed new wind farms by purchasing wind-production tax credits to offset income and lower their tax bills. However, in 2009 that tax credit was of little use to banks that were struggling financially, so Congress stepped in and created a new tax credit for the developers themselves as part of the stimulus bill passed in 2009. Companies that can’t benefit from the 30 percent tax credit were given the option of getting an equivalent grant directly from the government.
“It was extraordinary the impact that lifeline had,” Denise Bode, CEO of the wind association, said of the new subsidy. “The industry was dead in the water” in early 2009, she said.
The new incentives had less of an impact on companies that make wind turbines, blades and other parts. The wind industry gained 1,500 to 2,000 jobs overall last year, but that was only because employment for the new wind farms offset a drop of as many as 2,000 jobs in manufacturing, according to the association.
Texas extended its lead over Iowa in wind power by adding 2,292 megawatts of capacity in 2009, boosting the state’s total to 9,410 megawatts.
California remained No. 3 with 2,794 megawatts but added just 277 megawatts in 2009.
Bode said construction nationwide should continue fairly strong in 2010 ahead of the expiration of the incentives, but she stopped short of predicting it could reach 2009’s level.
She also said the industry’s long-term growth, and particularly the future of turbine manufacturing, depend on whether Congress enacts a renewable electricity mandate. Such a policy, she said, “sends the right signal to these manufacturers who are saying, ‘Where do I put my next factory? Do I put it in China or the U.S.?’ ”
A leading transmission company in Iowa, ITC-Midwest, has 9,000 megawatts of requests pending for connecting proposed projects, two-thirds of which are in Iowa and most of the rest in Minnesota. The company expects about 400 to 700 megawatts of those projects to be connected this year. ITC-Midwest, which operates lines purchased from Alliant Energy, connected 716 megawatts of wind power in 2009.
“We haven’t seen any slowdown in requests moving forward,” said Doug Collins, executive director of ITC-Midwest.
Like Bode, the company believes additional action from Congress would help speed development of the wind industry in the long term.
A bill passed by the Senate Energy Committee in 2009 would require utilities to get up to 15 percent of their power from wind and other renewable sources by 2021. It would also give federal regulators authority to intervene in disputes among states over paying for and locating the new long-distance transmission lines that would carry power from wind farms to urban areas.
ITC-Midwest’s parent company has proposed a 3,000-mile network of transmission lines called the Green Power Express to carry power from as far west as the Dakotas to Illinois and possibly Indiana.
The renewable power bill was intended to be married to broader legislation, now stalled in the Senate, that would set up a cap-and-trade system for regulating greenhouse gas emissions. Democratic leaders have not said whether they would take up the renewable power bill separately.
