FICKLE U.S. INCENTIVES CRIPPLE NEW ENERGY

US wind energy incentives: ‘Stop-go’ policies hamper renewable energy roll out
Bob Moser, 8 April 2011 (Wind Energy Update)

"…US wind sector [2010 new] orders fell by nearly 50% from 2009, and the industry took a hit as businesses throughout hesitated to expand with the impending end of the…1603 cash grant [which] simplified participation for developers by shifting unfavorable tax credits to unfront payments that are not tied to a particular company's income. It was a game-changer for renewable energy developers, covering 30% of the full cost of the wind turbines.

"…[S]imilar drops in market activity happened in 2000, 2002 and 2004 when owners hesitated to invest because of uncertainty over federal support, and the following year sales recovered. With the 1603 cash grant [finally – at the very end of the year] renewed for a year, it now stands to reason that an upward swing may be in store for 2011. Owners have this year to get projects started, and those who paused last year after receiving permits should be placing orders…"

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"America's wind industry built 5,115 MW of wind power in 2010, barely half of the effort in 2009. The industry opened 2011 with more than 5,600 MW currently under construction, more than the same period a year earlier.

"In late March, Senator Sherrod Brown (D-OH) introduced legislation to renew the Security in Energy and Manufacturing Act, which includes the Advanced Energy Manufacturing Tax Credit program, commonly known as 48C. The program provides investment tax credits of 30% for US companies that manufacture parts for renewable energy equipment…The 48C credit, part of the Recovery Act of 2009, was so popular that the Department of Energy said it was three times oversubscribed for the US$2.3 billion made available. Nationwide, US$5.8 billion in unfunded applications were deemed eligible. Brown's office says many of those manufacturers are still waiting on the 48C credit to build or expand their business…"

Sadly, this has happened before. (click to enlarge)

"A House of Representatives bill introduced in January, HR487, has proposed requiring 100% domestic content in property eligible for federal grants or tax credits…Amy Grace, North American wind analyst with Bloomberg New Energy Finance, thinks “Buy American” legislation is clearly a fearful reaction to Chinese turbines, and isn't necessary...Most big manufacturers have plants open in the US, and while they may get some bearings or gearboxes from China, blades and towers are almost always sourced within the US, as are most smaller turbine parts, Grace said.

"Even if tax credits don't expire, Grace sees a 'huge' chance of a US turbine market dip by 2013, due to no public mandate for demand growth…[A] Renewable Electricity Standard is likely the only move left for federal government to ensure the wind energy industry grows at a consistent pace…"