Incentives drive wind towards 20% of US power by 2030

 

The United States government has supported wind energy since 1992 through the Production Tax Credit (PTC). This is a federal incentive that currently provides a ten year corporate income tax credit of 2 US cents for each kilowatt hour of electricity produced.

 

Although not available continuously since its launch, the PTC is presently in operation until the end of 2012. The incentive helped encourage the US wind power industry to install a world record amount of new capacity in 2008 - a total of 8,300 MW.

 

Close to 30 US states have also introduced a Renewables Portfolio Standard, a legally binding commitment on power companies to source an increasing proportion of their supply from renewable sources. Texas, which started its RPS in 1999, has seen wind power capacity expand from 180 MW to over 7,100 MW by the end of 2008.

 

According to the 2008 Energy Report produced by the state of Texas government, wind energy growth has been driven by a variety of factors, “including government subsidies and tax incentives, improved technology, higher fossil fuel prices and investor concerns about potential federal action to reduce carbon emissions, which could make electricity from fossil fuels more expensive.”

 

Symbolic of the shift which has taken place is the decision by Texan oil billionaire T. Boone Pickens to endorse a shift away from US dependence on imported oil and gas towards massive investment in wind. 

 

Texan power utilities are now considering a plan to invest $4.9 billion in improvements to the state’s transmission lines so that wind-generated electricity from wind farms like Horse Hollow in West Texas can be sent direct to demand centres such as the city of Dallas. The plan would add transmission lines capable of moving about 18,000 MW.

 

Nationally, the US Department of Energy forecasts that 20% of electricity could come from the wind by 2030. Newly elected President Barack Obama has said he would like to see production from renewable energy sources double over the next three years.

 

In its recently adopted stimulus package the US Congress agreed a number of initiatives which will further drive wind energy development. These include a three year extension of the Production Tax Credit, the option to benefit from a 30% Investment Tax Credit instead of the PTC and a $6 bn renewable energy loan guarantee programme.