With its enormous tracts of land and rich wind resources, the United States has outstanding potential to generate substantial amounts of megawatts from wind. According to a report recently published by the Department of Energy, the United States could realistically generate 20% of its electricity from wind by 2030—and some analysts believe that a higher penetration is possible. This scenario will only be realized, however, if the U.S. enacts long-term policies to promote renewable energy at both the federal and state level.
Status at federal level
The Production Tax Credit is of vital importance to the wind industry. In recent years, Congress has extended the PTC only one or two years at a time. In the past, when Congress failed to pass the PTC before it expired, a boom-and-bust cycle resulted. The PTC next expires in December 2008, and to avoid a momentum-killing bust, the industry needs an immediate extension. A long-term extension will provide the industry with the stability it needs to continue recent growth.
A national renewable portfolio standard which requires utilities to meet a certain percentage of their electricity sales from renewables would also help drive the market. The long-term predictability of a national RPS will enable the industry to attract investment capital and achieve manufacturing economies of scale that will lower costs. Investment follows policy: the states that have already adopted an RPS are experiencing growing investment from the wind industry. Vestas applauds this commitment to renewable energy.
Initiatives at state level
Twenty-six 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.
U.S. transmission system in urgent need of modernization
In addition to adopting long-term incentives for renewables, the U.S. transmission system is in urgent need of modernization and expansion. Authorities at federal and state levels must make long-term improvements to the power grid, reforming the way the nation plans and pays for new transmission assets, and the way those assets are managed. “If we are to increase the pace at which wind power is expanding,” says Vestas’ CEO Ditlev Engel, “politicians must back their visions with action to improve the grid—and do so quickly.”
Challenges ahead, but grounds for optimism
Despite the challenges that lie ahead, there are grounds for optimism. With energy security and climate change placed high on the U.S. political agenda, there is more focus on providing a stable regulatory framework for the renewable industry than ever before. The American people are calling for actions on critical energy issues. Wind energy is poised to be a big part of the solution.
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American Wind Energy Association (AWEA)
Wind on the Wires
Regional Greenhouse Gas Initiative