the film
Economic and dam related articles

Wind, Solar Power

by Wendy Koch
Sheboygan Press, April 12, 2014

Cheap natural gas, uncertainty over tax subsidies has investors wary

Renewable energy continues to grow in the U.S., especially solar; but it's drawing fewer investments as the cost of its technologyfalls and natural gas stays cheap.

U.S. wind energy, although 43 percent cheaper to produce now than four years ago, saw a significant slowdown in its growth in 2013, according to a report released Thursday by the American Wind Energy Association. It added a record 13,131 megawatts of power in 2012, but that fell 92 percent to only 1,087 megawatts last year -- the lowest level since 2004.

The reason? Uncertainty that Congress would renew a federal tax subsidy for wind energy.

"People didn't know it would be passed . . . so they weren't creating projects" early last year, association president Tom Kiernan said. It takes nine months to plan a wind farm, he said, so the one-year extension in January 2013 didn't trigger construction until the second half of 2013.

Kiernan expects this year will see a rebound in new capacity, but how much will depend on whether Congress extends the tax subsidy, which expired in January. An extension is pending in the Senate.

The energy association report is the latest to show the challenges confronting the clean energy sector.

Investments in renewable energy fell 14 percent globally in 2013, according to an analysis Monday by the United Nations Environment Programme.

The U.S., which saw a 10 percent drop, fared better than Europe, which had a 44 percent dip, but worse than China, which saw a 6 percent decrease.

The U.N. analysis attributes the change to policy uncertainty, including the expired U.S. wind subsidy, and falling technology costs, notably of solar panels. Yet it sees another factor in the U.S. as well.

"The shale revolution certainly has had an impact," said Eric Usher, manager of the programme's seed capital programs.

He notes the boom in U.S. production of natural gas, largely because of the use of hydraulic fracturing, has lowered pricesand made it more difficult for wind and solar to compete.

Kiernan said, "We do have a tough time competing with natural gas." But the U.S. wind industry can do something that natural gas cannot -- give customers a constant price for 20 or even 30 years, he said. Natural gas prices fluctuate, depending largely on production.

Unlike wind, the U.S. solar industry is eligible for investment and residential tax credits through the end of 2016.

The wind production tax credit typically is renewed a year at a time; and three previous lapses -- in 2000, 2002 and 2004 -- each led to a significant drop in installations of wind energy.

The tax credit allows producers to reduce their tax bill by 2.3 cents per kilowatt-hour during a project's first 10 years.

Wendy Koch
Wind, Solar Power
Sheboygan Press, April 12, 2014

See what you can learn

learn more on topics covered in the film
see the video
read the script
learn the songs
discussion forum
salmon animation