Wind Energy Report Suggests Huge Untapped Midwest Market

(MoneyWatch)  A just-released annual report from the American Wind Energy Association shows that Texas remains the nation's top generator in both total and new wind energy, with total installed capacity and newly added generation of 4,446 megawatts and 1,618 megawatts, respectively, as of the beginning of the year. California remained the nation's second-leading generator of total installed capacity, with a cumulative 2,439 megawatts of power in 2007.

Wind power is one of the world's fastest growing energy sources on a percentage basis. U.S. wind power capacity has grown by an average of 29 percent per annum for the last five years (2003 - 2007), according to AWEA. Four of the nation's five largest wind projects operate in Texas. The four other states topping the list for newly added capacity in 2007 were Colorado, Illinois, Oregon and Minnesota - adding between 405 and 776 megawatts.

In new listings provided by the AWEA, FPL Energy operates the nation's largest wind farms, GE Energy owns the largest U.S. market share for wind turbines, and Xcel Energy boasts more wind on its system than any other investor-owned utility.

In terms of wind resource possibility, as measured by annual energy potential in the billions of kilowatt-hour (kWh) and windy land use area availability (for wind class of 3-wind speeds of 14.3-to-15.7 m.p.h.-or higher), the mid-western states offer the greatest development promise, followed by the states in the Pacific Northwest (including Northern California), and finally by the Northeast.

Paradoxically, of the top ten states for wind power potential, only Texas and Minnesota topped AWEA's list for actual wind power generation.

Wind energy development is strongly tied to financial incentives and infrastructure build-out needs -- such as transmission lines to/from turbine farms. Today, there is a federal production tax credit (PTC) of 2 cents/kWh for the first ten years of a wind farm's life (which is scheduled to expire on December 31, 2008.)

At the state level, there are differing degrees of incentives being offered to the wind power industry, ranging from a renewable portfolio standard (RPS), which mandates that a state's electricity portfolio must contain a certain percentage of renewable energy, to tax credits or sales tax exemptions (e.g. for materials used in the construction of a wind power generation facility).

North and South Dakota, listed first and fourth, respectively, in wind energy potential, do not currently mandate any renewable standards for wind energy. Whereas, in California, 20 percent of the state's electric sales must be procured from renewable sources by 2010.

The federal production tax credit, currently being debated in the U.S. Senate, will likely be extended before year-end. However, renewal of the PTC alone is not sufficient to stimulate wind power development. At present, 24 states plus the District of Columbia have RPS policies. Amid the rising costs of fuels like natural gas and oil, efforts to increase the use of renewable energies, such as wind power, will necessitate states' lawmakers to legislate renewable power standards -- or increase existing percentages -- and be willing to proffer the tax incentives required by both consumers and manufacturers alike.