During President Bush’s 2006 State of the Union address he announced a national goal, of meeting 20% of the nation’s energy needs from wind energy, by 2030. The timeline for meeting this goal was determined in part by the Department of Energy, National Renewable Energy Laboratory and the AWEA (American Wind Energy Association) and will require an increase of over 289,000 MW of wind energy production in the next 22 years.
Wind energy development, like many other industries is driven by tax equity investment. For wind the extension of the PTC (Production Tax Credit) is considered crucial to structuring and financing the development of the 20% by 2030 goal. Nestled in the economic bailout bill was a year extension of the PTC set to expire this December until December of 2009.
The extension of one year of tax credits, at a cost to the taxpayer of roughly $8B is hardly sufficient to drive these lofty goals to fruition and the AWEA continues to lobby Congress for longer extensions. Additionally, the American transmission grid is already congested. In order to achieve this goal using the centralized generation model of large, utility scale wind farms, we must increase transmission.
The proposed transmission “superhighway” estimated to cost between $23 -26B must also overcome strategic difficulties including better technical integration into the existing grid, better load management over larger balancing areas and, gasp, regulatory changes. Environmental issues surrounding habitat disturbances, wildlife and avian risks, visual impacts and noise are other mitigating factors of the centralized wind farms.
Just as with local pipeline issues, thousands of property owners along the proposed 19,000MI 765KV superhighway stand to lose their holdings to eminent domain if energy developers like T. Boone Pickens convince Congress to pave the way and help foot the bill. Benefits of achieving success include a reduction in CO2 emissions, less water use for energy production and price stability associated with independence from foreign fuel.
Despite these barriers attendees of the Wind Power Finance and Investment Workshop I attended last week in New York City are optimistic about the future of the wind industry. While Vestas, Gamesa and Suzlon, large turbine manufacturers, have no plans to manufacture anything but blades and towers in the US it is expected that as many as 500,000 new jobs will be created by 2030 and the tax base to rural communities will increase by $1.5B and land owners will receive $600M per year in lease revenue.
All these figures relate only to large, centralized wind farms and even the PTC has little to do with small wind turbines like mine unless they are deployed within a utility scale distributed network as we are working toward doing. Nevertheless, I was happy to see the PTC extended even though the proposed tax base increase does not come close to covering the cost to the taxpayer of providing the PTC as it will definitely drive the renewable energy industry.
Again, I have to hearken back to my battle cry for public ownership of essential services such as energy production. Please note that the cost to the taxpayer of providing large institutional investors tax credits exceeds the returns by a significant margin as listed above and does not take into account the projected $23 trillion in revenues to be earned by these subsidized projects. Those revenues could certainly support health care, transportation, infrastructure, and have a profound impact on the quality of life of every American.
As an energy developer I will happily sell my product to anyone but as a populist I hope to see the V-LIM and other renewable technologies in the hands of public utilities where it can do the most good.