With its enormous tracts of land and rich wind resources, the US (currently the world’s second largest wind market with 12,634 MW installed), could overtake Germany in the coming years. This will only happen, however, if the US enacts long-term policies at both federal and state level to promote renewable energy.
Status at federal level
In June 2006, Congress passed a bill that included a one-year extension of the Production Tax Credit (PTC), which offers incentives to invest in renewable energy. To date, Congress has extended the PTC by one to two years at a time. A lengthy extension of the PTC is vital to ensure stable market conditions and to prevent a “boom and bust” cycle which deters manufacturers from investing in production facilities and thereby damaging the wind energy supply chain.
In August 2007, the House of Representatives passed a four-year extension to the PTC and a requirement for electric utilities to generate 15 per cent of their electricity by 2020 from renewable sources. However, the PTC and a national Renewable Portfolio Standard failed to pass in the Senate, and so in December, Congress passed an Energy bill which did not include measures that are of great importance to the renewable industry.
Initiatives at state level
Twenty-five states have already adopted an RPS in order to stimulate the market for renewable energy. Texas and California, which have both adopted Renewable Portfolio Standards, have the most wind power installed, with 3,352 MW and 2,376 MW respectively.
A number of states across the U.S. are also implementing programmes focusing specifically on the climate issue. The Regional Greenhouse Gas Initiative, for example, is an effort by Northeastern and Mid-Atlantic states to reduce CO2 emissions by implementing a multi-state cap and trade programme, i.e. a market-based emission trading system between these states.
Challenges ahead, but grounds for optimism
In addition to adopting long-term incentives for renewable energy, another challenge that faces the industry is the issue of transmission. The U.S. transmission system is in urgent need of modernisation and expansion, challenging the authorities at federal and state levels to focus on more long-term improvements to the power grid.
Despite the challenges that lie ahead, there are grounds for optimism. With energy security and climate change placed high on the agenda in the U.S., there is more focus on providing a stable regulatory framework for the renewable industry than ever before.
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American Wind Energy Association (AWEA)
Wind on the Wires
Regional Greenhouse Gas Initiative