A year-end rush to get projects started has resulted in a record number of wind farms under construction across the nation's midsection, a trade group said Thursday.
The Dec. 31 expiration of the federal production tax credit for renewable energy led to more than 12,300 megawatts of wind projects under construction by the end of the year. Another 5,000 megawatts of capacity are under long-term contracts and have yet to start construction, the American Wind Energy Association said in its fourth-quarter market report.
Congress let the credit expire at the end of 2012, but quickly renewed it and changed the rules so wind developers could start construction by the end of 2013 to qualify. Projects previously had to be producing electricity by the deadline to qualify.
“We knew when the PTC (production tax credit) rules came out early in the year that there would be a fairly powerful response from the industry ramping activity back up to qualify,” said Liz Salerno, the association's vice president of data and analysis. “The response we've seen in those numbers is pretty incredible.”
The under-construction rush was tempered by just 1,084 megawatts of wind capacity coming into production in 2013, a drop of 92 percent from the 13,131 megawatts installed in 2012. One megawatt can power about 200 homes during peak times.
Oklahoma developers didn't finish any wind farms in 2013, but the state remains in sixth place for wind capacity with 3,134 megawatts. Two Oklahoma wind farms began construction in the fourth quarter: TradeWind Energy's 141-megawatt Osage County development and Enel Green Power NA's 150-megawatt Origin wind farm in Murray and Carter counties.
Prices power farms
Public Service Co. of Oklahoma signed three power-purchase agreements for nearly 600 megawatts of wind from three new projects to be constructed in Oklahoma. Several out-of-state utilities — including those in Georgia, Arkansas, Nebraska and Texas — also took advantage of low prices and signed long-term contracts totaling 700 megawatts with Oklahoma wind developers.
“They're just locking in prices they've never seen before,” Salerno said. “It just makes so much sense, and you're seeing neighboring states wanting to get in on the action. Utilities outside Oklahoma are looking to benefit from this low-cost power by signing contracts.”
However, continued uncertainty over the tax credit will deter future project development, said Tom Kiernan, CEO of the American Wind Energy Association. He urged Congress to renew the credit to provide stability to the wind industry.
“In the absence of long-term policies, the wind industry should not be left out in the cold while Congress decides the way forward on energy,” Kiernan said in a news release.
Salerno said suppliers and factories are buzzing with activity, with many manufacturers adding shifts to keep up with demand.
“We're going to see factory activity continue for a little while, but if you're early on in the supply chain, you're the first to see the falloff,” she said. “That's what we're trying to prevent here; it's not a very efficient way to maintain manufacturing in this country.”
Congress is focused on broader measures of tax reform, but the wind industry continues to push for a package of tax breaks, known as extenders, that include renewal of the production tax credit. In previous years when the credit expired, Congress renewed the incentive and made it retroactive.
The incentive gave producers a 2.3 cent-per-kilowatt-hour tax credit for electricity from wind generation for up to 10 years. Estimates from Congress' Joint Committee on Taxation and the Congressional Research Service put the cost of the credit at between $7.7 billion and $9.7 billion from 2013 to 2017.