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Wind Energy in the USA

The USA is fast catching up Germany, the historic world leader in wind energy in terms of installed capacity. In 2007, the US added 5,200megawatts (MW) of new capacity, an increase of 45% according to the American Wind Energy Association (AWEA). Total installed capacity in the US reached 16,818MW at the end of 2007 versus 22,247MW for Germany. If the US continues to add wind energy capacity at the current rate, it will surpass Germany and claim world leadership by end 2009. The AWEA estimates that US wind turbines should produce some 48billion Kwh in 2008, equivalent to 1% of total American electricity production while a recent US Department of Energy report estimates that the US could generate 20% of its electricity needs via wind energy by 2030. The most recent data from the AWEA give installed capacity in the US at 19,559MW with a further 9,022MW under construction.

Given the heavy capital expenditure needed for wind energy, long term, stable policies at both federal and state level are necessary to encourage investments. In the US, this has not always been the case. At the state level, the Production Tax Credit is a key driver for wind energy. In recent years, Congress has extended the PTC by one or two years at a time. Any delay in extending the PTC resulted in projects being put on hold and created a “boom and bust” cycle. The current PTC expires in December 2008 and while the wind energy industry is keen to have Congress renew the PTC as early as possible, this is unlikely in an election year.

The second initiative that has been most discussed is a Renewable Portfolio Standard (RPS). This obliges utility groups to match a certain percentage of their electricity sales from renewable sources. This would provide the long term visibility that wind energy needs to encourage capital investment.

While there has been considerable debate on RPS at the federal level, 26 states have already introduced RPS. Texas and California were amongst the earliest to adopt RPS and now boast the two greatest installed capacities with 5,605MW and 2,484MW respectively. The next in rank is Iowa with 1,375MW and Minnesota with 1,366MW. Several other initiatives have recently been introduced most notably the Regional Greenhouse Gas Initiative. This combines efforts in North-Eastern and Mid-Atlantic states to reduce CO2 emissions by implementing a multi-state cap and trade programme.

One of the biggest obstacles to expanding wind energy capacity in the US is the lack of infrastructure investment in transmission capabilities and the need for modernisation of the national grid.