US Wind Energy
Wind energy is now one of the most prominent sources of renewable energy. In 2010, wind power consisted of 2.3% of the electricity generated in the US, and this proportion increased to 7.29% in 2019.[1] Despite this sharp increase in supply and demand, the wind energy market has not matured enough and will require more aggressive government funding to push wind energy into the mainstream US energy market, especially this year in 2020.
Average Wind Speeds in the US, related to potential wind energy generation capacity.
Actual installed wind energy capacity in the US, as of the end of 2018.
Source: https://en.wikipedia.org/wiki/United_States_wind_energy_policy
Current Government Funding Incentives via Tax Credits
In the past few decades, tax credits have supported the adoption of wind power technology by cost reductions and subsidies. There are two main types of tax credits that has driven the wind energy industry:
- Investment Tax Credit – The Investment Tax Credit provides cost reductions for the installation of wind turbines. Since the incentives are based on facility installation rather than performance, low production and reliability reduced the incentive’s favorability, and ITCs eventually expired in 1986 without renewals.[3]
- Production Tax Credit – The Production Tax Credit provides cost reductions based on the performance of wind energy facilities. The PTC rose up in as a part of the Energy Policy Act of 1992, after ITC fell out of favor. This change in funding forced wind turbines to focus on reliability and efficiency, incentivizing technological advancements. One criticism of production tax credit is that the incentives make wind power cheaper for utilities and consumers, but it comes at the expense of taxpayers.[4] The PTC has undergone multiple phases of expiration and extension from 1992 to today. The latest grant was a 5-year PTC in 2015, and is looking to phase out this year in 2020.
Importance of Continuing Government Funding in 2020
As wind energy sector’s latest (and possibly final) 5-year Policy Tax Credit starts to phase out, the future of US policies surrounding wind energy’s economic incentives remains uncertain. Despite the Production Tax Credit’s success in spurring over $143 billion private investment and 140,000+ jobs in the wind energy sector[5], past trends and current situations suggest that continued government financial support will be critical in 2020.
In the past, the wind energy industry’s research and development efforts have relied heavily on Production Tax Credits, with annual wind capacities corresponding closely to the elapse and expiration of the policy. If the PTC isn’t renewed this year, the sector can expect to have a significant decrease in wind power outputted.
Annual wind capacities correspond with the elapse and expiration of the PTC.
Source: https://en.wikipedia.org/wiki/United_States_wind_energy_policy
Unfortunately, US’s current economic scene also poses a major threat for the sector’s smooth entrance into the financial independence in the market. With the coronavirus pandemic pushing the country into a likely recession, the wind industry is a) pressing lawmakers to extend the 2020 PTC deadline as the economic disruptions can cause significant delays to energy projects and b) asking the administration to include renewable energy in its $1 trillion (specific value still under debate) economic stimulus plan as sectors with less cash-flow are hit hardest by current situations.[6] As 2020 heads towards an uncertain direction for the US, the renewable wind energy sector will fight for its spot in the government’s continued economic support, as receiving federal financial support in 2020 will be crucial for the sector’s long-term success.
[1] “Electric Power Monthly” (PDF). Report. U.S. Department of Energy, Energy Information Administration. March 4, 2015.
[2] “AWEA 3rd quarter 2019 Public Market Report” (PDF). American Wind Energy Association (AWEA). September 2019. December 8, 2019.
[3] Gray, Tom (September 2004). “State of the Wind Energy Industry in 2004”. American Wind Energy Association. 17 April 2011.
[4] Simmons, Randy; Yonk, Ryan; Hansen, Megan (July 2015), The True Cost of Energy: Wind (PDF). Utah State University. July 7, 2015
[5] “Tax Policy”. American Wind Energy Association. No Date.
[6] St. John, Jeff; “Solar, Wind and Storage Industries Seek Relief in Coronavirus Stimulus Package”. Green Tech Media. March 19, 2020
Overall, this post opened my eyes to many aspects of the wind energy issues that I hadn’t considered before. First, on an uplifting note, I didn’t know that 7.29% of energy generated in the U.S. in 2019 was wind energy! That is much higher than the data from the last time I checked and made me feel a glimpse of hope about the rise of renewable energy. On the other hand, this post also brought up the impact that the coronavirus pandemic will have on the speed of legislation passing through Congress. While I have considered the broad implications of the economic impact of the virus, I wonder now what other types of spending projects will be curtailed in Washington because of this disruption.
It was also interesting to see on the maps provided that there is still a strong disconnect between the windiest areas of the country and the areas that supply the most wind power. For instance, the area off the east coast has very high wind speeds but almost no wind power generation. By contrast, Texas has average overall wind speeds but is leading the country in wind power generation. This discrepancy is likely due to the fact that Texas has a lot of open space where wind turbines can be built without disrupting animal migration paths or human views of the pristine landscape, two of the most common arguments against wind power. However, the fact that Texas can make so much electricity out of land with sub-optimal wind speeds shows how much power could be generated if wind speeds off the east coast were tapped. Thus, I think it will be imperative for renewable energy advocates to push for offshore wind implementation on the east coast moving forward.
Importance of Continuing Government Funding in 2020
As wind energy sector’s latest (and possibly final) 5-year Policy Tax Credit starts to phase out, the future of US policies surrounding wind energy’s economic incentives remains uncertain. Despite the Production Tax Credit’s success in spurring over $143 billion private investment and 140,000+ jobs in the wind energy sector[5], past trends and current situations suggest that continued government financial support will be critical in 2020.
Thank you for your good article
This blog post definitely made me consider where the US is sourcing its electricity from. Jie mentioned that in 2010, only 2.3% of the electricity was generated by wind, whereas 7.29% was generated in 2019. Though there was a 5% growth, this range still seemed relatively low to me. Wind power seems like a feasible and more eco-friendly way of generating electricity, a lot more environmentally conscious than burning coal/fossil fuels. However, as seen above, the US government hasn’t really made significant effort to encourage development in windmills, wind farms, etc. Of course, I don’t know much about other energy sources that the US may use, so I’d also love to learn more about hydropower, renewables, nuclear, etc. I found this topic especially interesting since it connects to the research I did for my blog post regarding electric vehicles: it turns out that EVs aren’t actually a ‘greener alternative’ unless the electricity it uses is generated through greener means as well. Thus, Jie’s blog post definitely looks at energy through broader lens, and I’d love to learn more about how wind power may grow in the US and globally, too. I think it’d also be very interesting to compare how the US’s electricity generation compares to other countries’. For example, I think Norway is one of the leading countries when it comes to clean energy (it mainly uses hydropower), with 98% of its electricity generated from renewable means — we could really learn a lot from them.
This blog post did a good job of outlining the key aspects of wind energy policy and the uncertainty of wind energy’s future. I thought the distribution in the first two maps were really interesting and some aspects were unexpected. For the most part, I wasn’t surprised by the first map, which showed greater wind speeds along the coast. However, I was shocked to see how much wind energy capacity was installed in Texas, even more so than California, in the second map. I was not expecting to see this, given that Texas is a predominantly conservative state and often conservatives are less pro-renewable energy, however this may be due to an increase of open space and availability for wind turbines. This was very uplifting to see in tandem with learning that 7.29% of all U.S. energy production came from wind in 2019. While at first I was taken aback at this figure as I thought it would have been higher, wind can be an unpredictable source of energy due to changing environmental conditions and inconsistent winds. Further, I know that there are several environmental issues that come with wind power such as spurring NIMBY debates, affecting animal habitats, and posing a threat to flying wildlife. I think the future of wind energy will have to deal with many of these issues and decide how much open land should be devoted to wind turbines, or if there are alternative renewables that take up less space and are equally equitable and effective. I think some interesting renewable energy projects that are still developing but should receive more attention in the future are off-shore wind energy and tidal energy. Projects such as these may take up less space on land and produce similar results, and often wind speeds are more predictable in the ocean.
I also thought it was really interesting that you put your post in perspective with the coronavirus pandemic, as everything in the future remains uncertain due to our current situation. Further, I think the next administration will play a big role in the future of wind energy, however it was encouraging to see the rise in wind energy while Trump was in office. Overall I thought this was a really engaging piece and it will be interesting to see what happens to wind energy in the coming years – whether it flourishes or declines and what factors play a role in that fate.
I really appreciate the two maps and the chart that were provided, they contained a lot of interesting information, like the fact that Texas is the nation’s leader in wind energy (which I expect was driven by it being a good business decision, rather than government policy), and there was a spike in wind power installation in 2012 (leftover from the Obama stimulus perhaps?). While I think both of the wind tax credits were steps in the right direction, something much more radical would need to be done to bring wind power to a level that would quickly and substantially bring down carbon emissions. With the right government, this crisis should be seen as an opportunity to heavily subsidize or even nationalize the wind sector, and boost production, while bringing down the now skyrocketing unemployment. I don’t see Trump or Biden doing this if they were elected in 2020 though, although Biden would be more likely to at least extend the tax credit. I think what can be done through private means with only slight government help is somewhat impressive, but it still pales in comparison to the crisis at hand.