Wind Energy Forecast for 2012: Outlook Uncertain
Posted March 8th, 2012
Onshore wind power is in a good place, at least through the end of 2012. Wind power made up 35 percent of all new generating capacity added to the U.S. grid since 2007—twice what coal and nuclear combined have added in the same time period—according to the American Wind Energy Association (AWEA).
And U.S. developers need to take advantage of federal tax credits for renewables by the end of 2012, so 2012 may result in the largest number of wind projects completed in one year.
Many wind projects began construction under the 1603 Treasury Grant Program. These projects had to commence by December 31, 2011 in order to qualify for the 30 percent grant in lieu of investment tax credit (ITC).
Section 1603 will likely expire at years’ end, but the federal renewable energy production tax credit (PTC) will inspire wind developers to start construction in 2012. The PTC, which is set to expire on December 31, 2012, provides an income tax credit for the production of electricity from utility-scale wind turbines.
AWEA is pushing for a four-year extension of the PTC, but Elizabeth Salerno, director of industry data and analysis for AWEA, said wind developments post-2012 have a “question mark over them” for the time being due to the lack of long-term federal policy.
OUTLOOK 2012— A YEAR OF RESEARCH?
Many in the renewable energy industry consider the U.S. permitting and financial climate to be hostile toward offshore wind developments. Since offshore wind is an emerging North American technology, start-up costs are higher than onshore developments. Project cancellations became fairly common in 2011.
Cancellations leave prospective offshore wind developers in a quandary. Considering the unstable global financial environmental and the likely removal of federal grants for renewables, is now the right time to plan offshore wind projects?
In February, Secretary of the Interior Ken Salazar and Secretary of Energy Steven Chu unveiled a national offshore wind strategy with a goal of the deployment of 10 GW of offshore wind capacity by 2020 and 54 GW by 2030.
The potential value of offshore wind in the U.S. is sizeable. According to the U.S. Department of Energy’s National Renewable Energy Laboratory, the 28 U.S. coastal states consume 78 percent of the nation’s electricity, but only six of these states could meet even one-fifth of their power demand with land-based wind energy. This leaves a clean energy void that could be filled by offshore wind power.
And earlier this year, the Interior and Energy departments announced $50.5 million in funding opportunities for projects that support offshore wind energy deployment.
It’s likely that 2012 will not usher in the completion of any U.S. offshore wind projects, but it will be a time for permits and additional research.
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