Wednesday, August 21, 2013
Wind Turbine Construction Slows: Guest post by Willem Post
This guest post by Willem Post appeared as a letter to the editor in our local paper, the Valley News. (I have a subscription, but the letter may be behind a paywall for most people.) Post has allowed me to republish it in this blog.
To the Editor:
Things are looking up. There is a major slowdown in wind turbine construction all over the U.S.
In the first quarter of 2013, only 1.6 megawatts of wind turbine capacity was built and in the second quarter, zero was built. The main reason is the expiration of the Section 1603-c program at the end of 2012, which gave federal cash grants of about 30 percent of the project capital cost to wind turbine project developers.
This infusion of cash grants to Big Wind under the American Recovery and Reinvestment Act of 2009 changed the economics of the industry overnight. Projects that made no economic sense became viable with the cash grant (Lowell Mountain, etc.) In many cases, applications were rushed to take advantage of the cash grants before deadlines. The industry’s project pipeline was emptied, rushed to approval and built by the end of 2012.
During the cash grant program period, about 30,000 megawatts of new wind turbine capacity was built, more than doubling U.S. wind turbine capacity. The U.S. had never experienced that rate of growth with just the production tax credit (PTC).
With domestic, abundant, low-CO2 emitting (compared with coal), no-particulate emitting, low-cost natural gas , and continued flat demand for electricity, it’s no surprise the cash-grant-induced wind turbine bubble collapsed and will likely push installations back to mid-2000s levels, or less, if the PTC is finally allowed to expire after 24 years.
If extended, the PTC, set to expire at the end of 2013, will offset above-market wholesale prices for wind energy, but will drive just moderate levels of wind turbine capacity growth.
Willem Post is a frequent guest blogger on this blog. His most recent post was Off-Shore Wind Versus Nuclear. Another recent guest post is Wind in Vermont is Oversold. Many of his posts appear at The Energy Collective, where he is a high-ranked blogger.