Production Tax Credit Expiration Jeopardizes Wind Farm Manufacturing And Construction

It begins to look like Congress will let the $0.022 per kilowatt hour Production Tax Credit for wind generated electrical power expire when the current legislation runs out December 31, 2012, and that is already putting a damper on wind farm expansion plans, dampening the economic impacts of wind farm construction work and wind generation equipment manufacturing, as big players in that sector of the construction economy contemplate major layoffs. John Graham, CEO of BP Wind Energy, which owns the 100 megawatt Flat Ridge wind farm north of Medicine Lodge, Kansas, says the tax credit is still needed to make wind energy generation price competitive with coal and natural gas fueled power.

According to Graham, the Production Tax Credit costs the government $3.5 billion annually in lost tax revenue, but produces $15 to $20 billion in investment in wind power manufacturing and construction. Matt Kaplan of Cambridge, Massachusetts based IHS Emerging Energy Research estimates the Production Tax Credit has so far produced an addidional 12 gigawatts of wind power generating capacity, or 20% more additional generating capacity than any earlier year of wind power construction. Kaplan predicts the rate of growth will fall by 85% if the Production Tax Credit is permitted by Congress to expire at the end of this year.

Kaplan’s prediction has a strong historical basis: in the years 1999, 2001 and 2003, previous times Congress has allowed the Production Tax Credit to expire, new wind power generator construction plummeted between 73% and 93% upon expiration of the tax incentive. Once the Production Tax Credit expires, the only remaining incentive for continued wind power construction is the state by state legislative mandate for utilities to buy a certain percentage of their electricity from renewable sources – a mandate that only exists in twenty nine states.

Wind power equipment maker Vestas has already threatened layoffs of 1,600 plant workers in Colorado if the tax credit is permitted to expire, and Mitsubishi Heavy Industries already scrapped plans for a $100 million manufacturing facility in Arkansas. The American Wind Energy Association predicts loss of a total of 37,000 jobs if the credit is not renewed.

Midwest Wind Farms Pick Up Steam – Wait! Is That A Mixed Metaphor?

The twin spectres of reduced property values, and piles of dead birds and bats have long plagued developeers of proposed wind turbine farms in Midwestern states. Now, however, two victories for wind farm development may be the twittering birds of a new spring for wind power development in the region. In Wisconsin, it appears Senate Republicans failed to muster enough votes to rescind a Public Service Commission wind siting rule. The uncertainty about the fate of the rule has held up wind farm development in Wisconsin since 2010.

In Ohio, the state Supreme Court issued a ruling March 6, 2012, upholding the decision of the Ohio Power Siting Board to permit construction of a 9,000 acre wind farm by Buckeye Wind LLC. Opponents of the project contended befire the Board and the lower courts that the 541 foot required setback of wind turbines from neighboring property was insufficient to protect against damage by turbine blades breakig loose and flying through the air onto a neighbor’s land.

While neither of these decisions settles the issues once and for all time, both of them give some hope to the proposals of beleagured wind power developers in the Midwestern United States.

FTC Issues New Green Marketing Rules

Cracking down on misleading claims of environmental friendliness in marketing materials for numerous products and technologies, the Federal Trade Commission has issued new rules respecting the use of terms like “degradable” and “carbon offset” in advertising materials and on product packaging. Proponents of claims that products are “environmentally friendly” will be expected to produce competent and reliable scientific studies backing up their claims. Use of misleading certifications and seals of approval could subject advertisers to penalties. The guidelines discourage use of ambiguous phrases like “renewable materials” or “renewable energy” in favor of specific information about the materials and energy sources used in product manufacturing.

Pricing Cuts Promote Commercial Scale Solar Power Development

According to panelists at the 12th Annual Electric Power Conference and Exhibition in Baltimore this week, decreasing material and construction costs of commercial scale photovoltaic power plants [PV] and thermoelectric solar power production facilities [CSP/CST] are promoting commercial scale solar power production developments in climates where sunlight is available most of the year to “fuel” such facilities. Leo Casey, Vice President and Chief Technical Officer of Satcom Technology Corp. in Boston told attendees that utility scale installation cost for PV facilities has dropped from $5 per watt to $4 per watt already, and he expects future pricing cuts down to the level of $1 per watt for solar panels and $1.50 per watt for construction cost, or a total of as little as $2.50 per watt of installed capacity. According to William Bettenberg of Applied Materials, Inc., more and more utility companies are embracing PV technology, with 485 megawatts of PV generating capacity installed last year.

Bob McDonald of Skyline Solar, Inc., echoed the same theme regarding CSP/CST solar power production facilities. McDonald cited both reduced module cost and improved installation expense as contributing to an improved position for commercial scale solar thermal power generation, particularly since the stored heat involved in the CSP/T process makes such production facilities especially useful as load following power generation facilities, rapidly becoming less expensive to build than other types of “peaker” generating units.

War Funding Bill May Include Renewable Power Loan Rider

The $58.5 billion emergency military funding legislation for Iraq and Afghanistan now working its way through Congress might give a small boost to power plant construction in the form of $180 million in loans for nuclear plant construction and wind and solar power plant development. Speaker Pelosi is insisting that a nuclear loan program proposed for addition to the emergency funding bill give parity to wind and solar power development, with $90 million for nuclear construction loans and $90 million for wind and solar power development. If the package survives the legislative process, this funding could support as much as $9 billion in additional loan guarantees for nuclear power plant construction and $3 billion in loan guarantees for wind and solar power generating facility construction, including the $2 billion “borrowed” from earlier legislative proposals to fund extension of the “cash for clunkers” program in the economic stimulus package.

American Company Leads In Wind Power Operations

With 23 years of experience as a third party operator of wind power generation facilities, NAES Corporation of Issaquah, Washington, right here in the United States, is the world’s largest third party operator of wind energy generation facilities. NAES manages and operates 43 billion watts of wind energy facilities at 122 operating plants.

With 375 additional gigawatts of wind energy under development worldwide, NAES is a leader in power production even before passage of any American federal legislation promoting renewable energy growth and development. Hats off to one example of American technological ingenuity continuing to progress in spite of Congressional indifference.

Back To Square One On Climate Change

Senator Barbara Boxer’s action in discharging the climate change bill from her Environment and Public Works Committee without and Republican committee members in attendance has angered so many leaders on both sides of the aisle in that chamber that three Senate leaders have determined to go back to the drawing boards and craft an entirely new measure for consideration, rather than continuing to advance the Kerry/Boxer bill reported out Thursday.

Democrat John Kerry, Republican Lindsey Graham and Independent Joe Lieberman are already working on Plan B, a bill to promote green job creation while protecting the coal and steel industries, expanding nuclear power production, authorizing more offshore oil drilling, and subsidizing renewable energy research and development.

The possibility that plan B will focus on job creation rather than reducing carbon emissions and fighting climate change has fractured the environmental interests into warring factions. One side of the fissure, including the Environmental Defense Fund, is already putting out ads featuring energy made in America, 1.7 million “green jobs,” and reduced dependence on foreign oil. The other side, including the World Wildlife Fund and the Center for Biological Diversity, excoriates what they see as dilution of the global warming alarm message in favor of soft soaping ads they call “climate-light.”

Meanwhile, with Senate leaders acknowledging that a floor vote in any sort of climate change bill in the Senate won’t likely happen this year, energy lobbyists are ramping up their spending, and representatives of African nations are walking out of negotiations in Barcelona preliminary to the UN conference on a replacement agreement for the Kyoto Protocol set for December in Copenhagen. It remains to be seen whether the Boxer maneuver is a complete barrier, or just a speed bump on the road to Congressional action later in the calendar.

Senators Rip Texas Wind Farm Use Of Chinese Made Turbines

In a blinding flash of protectionism, New York Senator Charles Schumer has written a letter to Energy Secretary Steven Chu, asking Chu to block federal funding for development of a huge $1.5 billion Texas wind farm which will be build using turbines manufactured in China. The project is expected to create 330 jobs in Texas and 800 jobs in the Chinese factory which will build the turbines. “The purpose of the Recovery Act was to jump start the economy to create and save jobs – American jobs,” Schumer wrote. “American taxpayer dollars should not be used to finance those Chinese jobs.”

Walt Horniday, president of one of the U. S. partners in the project, responded, “This project will not take place without the planned benefits of the American Recovery and Reinvestment Act. Any characterization of this planned project as anything other than an economic development lifeline to the wind industry during tough economic times is just inaccurate.”

National Republican Senatorial Committee Chairman John Cornyn of Texas used the wind farm project as one example of a failure of Obama administration economic policies. “This just shows how ridiculous this whole stimulus proposal was,” Cornyn said, acknowledging, however, that “Texas would like to have the investment.” Cornyn seems to forget that the American Recovery and Reinvestment Act was crafted in Congress, and apparently passed without much thought by Senators and Representatives as to what American businesses would do with the $787 billion they were doling out.

Record Hill In Maine Getting Wind Farm Despite Congressional Foot Dragging

Even though the timetable for Congressional action on climate change legislation keeps getting pushed further and further down the calendar, some renewable energy projects are proceeding without waiting to see what Congress has in mind for the future of fuel and power in America. Record Hill Wind, a project being built along a north to south ridge line in Roxbury, Maine, is already under construction. The project will include 22 wind turbine generators along the peak of the ridge line, optimally arranged to catch the prevailing westerly winds from Canada and New Hampshire.

The 50.6 megawatt facility will produce 130 million kilowatt hours of power annually – enough to power every household in Oxford County. Delivery and erection of the turbine generators will start next June, with the facility to be commissioned in early fall 2010.

Consortium Using Stimulus Cash To Erect Chinese Made Wind Generators

A consortium of American and Chinese companies, using Chinese bank financing and US government grants and loans under the stimulus legislation, plans to build a $1.5 billion wind farm on 36,000 acres in West Texas, using 240 2.5 megawatt wind turbines manufactured in Shenyang, China.

Construction is scheduled to begin next March, when the first turbines will be arriving on site. The project will create 300 temporary and 30 permanent jobs, and when completed, should generate 600 megawatts of wind power. Companies involved in the project include A-Power Energy Generation Systems, U. S. Renewable energy Group, and Cielo Wind Power.

Energy Projects Moving Forward With Or Without Congressional Climate Change Action

While the politicians in Washington grind their teeth over the details of thousand page legislative proposals on energy policy, some energy projects continue to move forward without awaiting Congressional action. The federal Minerals Management Service has approved plans by Shell Offshore, Inc. for exploratory drilling in the Beaufort Sea off Alaska's North Slope, where producers expect to find 8.2 billion barrels of oil reserves and 27.6 million cubic feet of natural gas reserves.

On the other end of the renewability spectrum, Siemens Energy of Germany has been awarded six wind turbine generator orders for installation across the North American continent, aggregating $900 million. The 242 turbines in the combined six orders will have a power generating capacity of over 565 megawatts.

U.S. Leads Geothermal Power Production Capacity

According to the latest update from the Geothermal Energy Association, the United States continues to maintain world leadership in geothermal power production capacity. Total installed U.S. geothermal power production capacity is now nearly 3.16 million megawatts, representing 4% of 2007 total renewable energy consumption in the nation. Geothermal power output is currently concentrated in Alaska, California, Hawaii, Idaho, New Mexico, Nevada, Utah and Wyoming. In 2006 there were 34 such facilities in the U.S., and currently there are 132 on line.

Experts forecast 3% annual growth in the geothermal sector, though pending legislative cap and trade initiatives could double that growth to 6% annually. Success rates for geothermal power exploration are limited to about 25%, and exploration and production costs can range from $1,600 to $5,000 per kw of generation capacity. Once government policies are solidified, and available federal subsidies are identified more clearly, construction of such facilities in certain regions of the country could expand dramatically, with plans already on the drawing boards for facilities in Oregon, Mississippi, Florida, Louisiana and Colorado.

Senate May Split Renewable Energy From Cap And Trade

Senate Majority Leader Harry Reid is hinting that Congressional attention to health care reform, and the new urgency respecting financial regulatory reform, could push Senate floor consideration of climate change legislation past New Year's day. Responding to a reporter's question, Reid said, "We do have this health care matter. We now have the president in the last few days saying how important regulatory reform is. So, you know, we are going to have a busy, busy time the rest of this year. And of course, nothing terminates the end of this year. We still have next year to complete things that we have to."

Meanwhile, other Senators are talking about separating the controversial cap and trade provisions of energy policy legislation from the renewable energy mandates, in order to get a renewable energy mandate passed this session. Senator Byron Dorgan, an opponent of cap and trade, says, "It's increasingly difficult to have climate legislation done by the end of the year." Addressing the proposed mandate for 15% of electric power to be produced from renewable sources by 2021, Senate Energy and Natural Resources Committee ranking member Lisa Murowski said, "This might start to look attractive even without the cap and trade piece. That's not being ruled out as a possibility."

Other Senate Committee Chairmen with jurisdiction over climate change legislation, including Barbara Boxer of Environment and Public Works, and John Kerry of Foreign Relations, continue weekly meetings with swing vote Senators on cap and trade strategy.

Energy Reform Newcomers Flexing Their Muscles

Two relative newcomers to the political battles surrounding climate change issues flexed their rhetorical and governmental muscles today, in somewhat opposite directions. California Governor Arnold Schwarzenegger announced he will the renewable energy bill his legislature passed Saturday, in favor of an executive order imposing the same requirement that California achieve 33% of its energy from renewable resources by the year 2020. The California Public Utilities Commission estimates that restriction will increase energy construction costs in the state by $115 billion. And, environmentalists believe the governor plans to water down the requirement in his executive order by including nuclear power and hydroelectric power in the definition of "renewable."

Meanwhile, back in Washington, D.C., newly elected Senate Agriculture Committee Chairman Blanche Lincoln gave her first speech since being elected to the chair to the National Cattleman's Beef Association, and announced that she will oppose federal climate change legislation as passed by the House unless someone can answer the question how the bill will affect consumer prices for food. She claims the House passed measure places disproportionate burdens on Arkansas, and on the rural poor in particular.

North Carolina Ambivalent On Renewable Energy

The North Carolina legislature recently passed a number of bills providing incentives for renewable energy production and development, including a five year extension of renewable energy state tax credits awaiting Governor Easley's signature. However, the North Carolina Senate also passed a bill, now on its way to the North Carolina House, which would restrict the height of wind turbines located along the state's western ridgeline to 100 feet. According to Brandon R. Blevins, wind program coordinator for the Southern Alliance for Clean Energy, this legislative measure, if passed by the House and signed into law, would ban two thirds of the on shore wind resources in the state.

House action on the ridgeline turbine restriction measure is not expected until the legislature reconvenes in the spring of 2010. Hopefully by then North Carolina environmentalists will have determined whether or not clean energy resources are more important than scenic views.

DeKalb County Approves Wind Farm Zoning

Last week the County Board of DeKalb County, Illinois approved rezoning of nearly 200 acres of farmland in the county for construction of 119 wind turbine power generators, to be situated in Shabbona, Milan, Alton and Clinton Townships, over the objections of crowds of homeowners and other opponents who objected to destruction of what they characterized as "the county's agricultural heritage." The Board voted 16-4 to approve the zoning change, with the majority of Board members agreeing that stimulation of the local economy and the tax benefits to county government from construction and operation of the wind farm would outweigh the cultural and aesthetic considerations raised by wind farm opponents.

Energy Policy Bottleneck

Disputes over mandating renewable power production and carbon cap and trade credits have once again delayed mark up of major energy legislation in the House. House Energy and Commerce Chairman Henry Waxman and Energy and Environment Subcommittee Chairman Edward Markey jointly announced to other Energy and Commerce panel members that mark up of the climate and energy bill expected this week will be put off a week, to consider proposed changes to the 25% renewable power production mandate now in the bill, and separate efficiency increase requirements of 15% for electric power and 10% for natural gas, all by the year 2025.

Design and construction of new power plants sits on hold while these energy policy debates proceed at a snail's pace. Other energy issues include whether nuclear generation of electricity is or is not a "renewable" resource, and whether hydroelectric power produced from dams in the Southeast region since the early 1990's can be counted as renewable energy production.

Indiana To Mandate Renewable Enegry Production

The only state still without a mandate for production of electric power by renewable methods, Indiana's House of Representatives in Indianapolis passed a bill last week which will require 15 percent of electricity in the state be generated from renewable sources such as wind, solar power and biofuels. An earlier passed Senate version of the bill will have to be reconciled with the House legislation, but it appears renewable power generation construction projects will be coming off the drawing boards and onto the ground in Indiana very soon.

Two Factors To Play Out In Month End Energy Bill Markup

Senate energy and Natural Resources Chairman Jeff Bingaman hopes to hold a markup of the broad energy legislation the last week in March. Major contention is expected over the definition of "renewable energy," since the bill is expected to require 25% of all U.S. electric power to come from renewable sources by 2025. Everyone agrees that biofuels, wind and solar should be included, but there is intense debate over hydroelectric power and nuclear facilities as part of the definition.

This controversy could also impact the effectiveness of the proposed cap and trade credits in President Obama's long term budget proposals. If nuclear power and hydroelectric plants figure into the calculations, the revenue anticipated could fall dramatically. The outcome of this debate could have a big effect on the direction of power plant construction for the foreseeable future. Representative Chris Van Hollen of Maryland wants provisions in the cap and trade legislation directing that the revenue be returned directly to consumers to offset higher power bills.