The wind industry has behaved nicely this year. Some gifts would be appreciated.
These Christmas wishes would make the wind industry’s future much merrier. There are eight, so they will also light up Hanukkah’s nights.
1.) Santa must convince this Scrooge-like Congress to open its cold, calculating heart to an extension of the wind industry’s production tax credit (PTC) until 2016, matching the duration of solar’s investment tax credit (ITC).
Wind’s tax credit will expire at the end of 2012. It returns 2.3 cents for every kilowatt-hour of electricity produced in the project’s first 10 years. It has been up for extension eight times. The three times it was delayed, installations dropped 73 percent, 77 percent, and 93 percent, respectively. A just-released study showed a failure to extend could cost nearly 40,000 jobs and almost 10 billion dollars. If the credit is extended through 2016, the struggling U.S. economy would receive a wind industry that is bigger by $1 billion, as well as 25,000 new jobs.
2.) Santa could also renew the ITC Treasury Cash Grant options and renew the manufacturing tax credit for wind.
The ITC allows investors a 30 percent tax credit at the end of the first year of a project’s life instead of the PTC. The Cash Grant allows developers to take the 30 percent ITC as an upfront cash rebate. The manufacturing tax credits support the renewables’ supply chains.
Congress' resistance to extending these programs raises taxes on renewables developers and manufacturers, otherwise known as job creators.
3.) New transmission would be a wonderful gift. Wind is curtailed when there is more electricity being supplied than there are lines to carry it. Wind and the other renewables would profit greatly with more wires from resource-rich remote regions to populated areas where people are hungry for electricity.
4.) Wind needs better PR. Opponents of wind have seen it grow to 35 percent of new U.S. electricity generation, while coal’s share fell to 44 percent. Wind’s opponents want their market share back.
That likely explains why the media has recently been filled with claims that wind increases greenhouse gas emissions, that it drives up power prices, and that it is a serious threat to avian life.
“Silence is taken as ‘pour it on,’” a political consultant recently noted. “If you don’t respond to what people say, it becomes true.” Santa could help wind’s supporters spread the good word.
5.) If Santa brings grid operators up-to-date technologies and flexibility services with their new transmission, wind and the other renewables can do without scaled up energy storage for another two decades. Still, without adequate transmission, storage is the best alternative.
Experiments in energy storage are ongoing. Pumped hydro has proven itself. Compressed air energy storage (CAES) shows signs of being economic, if not always practical. And battery storage is being used for grid management. If Santa could leave cost-effective 20-megawatt battery packs under the trees of wire-limited grid operators, they could put more wind to work.
6.) Offshore wind. Europe has over 40 offshore wind farms with an installed capacity of 2,396 megawatts and 16 more projects, totaling an additional 3,972 megawatts, under construction. China has 102 megawatts of offshore wind in operation and some 2,300 megawatts in construction. But despite the Obama administration’s best efforts to facilitate and streamline, the U.S. has zero megawatts installed or under construction.
Santa could deliver passage of the specially structured ITC now before Congress that addresses offshore wind’s double whammy of high cost and protracted development. Bills have bipartisan support in both houses.
7.) An equitable intellectual property environment. Uneasy trade relations with China exploded this year. Sino-Wind troubles surround the legal battle between AMSC, a U.S. advanced technologies provider, and Sinovel, China’s leading turbine manufacturer.
The confession and conviction of a former employee of AMSC subsidiary WindTec for intellectual property (IP) theft and collusion with Sinovel make it hard not to believe in the Chinese company’s guilt. Evidence allegedly shows Sinovel requested the stolen IP, received it, had a $1.5-million-plus contract with the employee, and has been using the stolen software.
What the wind industry needs from Santa is, first, an equitable settlement between AMSC and Sinovel and, second, contractual certainty with which the industry can go back to work in the world’s biggest wind market.
Wind companies in China and around the world will profit enormously from this gift, but it could cost Sinovel a trillion-dollar settlement, so this will be a tough one. If Santa fails, the Chinese courts will take over.
8.) A consensus on dealing with greenhouse gases. This is the toughest one. Timely, scaled implementation of renewables requires a price on greenhouse gas emissions. Europeans widely accept the idea of climate change, are working on pricing emissions, and are rapidly building renewables. U.S. political opinion is less aligned. The wind industry needs a U.S. policy which addresses greenhouse gases and climate change.
Happy holidays.
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