Weather conditions in the wind industry.
A Windy Industry
For a while, it seemed like the wind industry might not make it as it battled strong headwinds from Congress and from abroad. Faced with weaker than expected demand for electricity, stiff competition from a resurgent natural gas, and the ever-present spectre of Chinese competition, turbine manufacturers suffered in 2012, as did manufacturers in other renewable sectors. Worse, key tax breaks amounting to one billion dollars were set to expire by the end of 2012 should the economy take a dive off of the Fiscal Cliff.
Of course the wind industry is no stranger to the ups and downs of cyclical business. Earlier this year, ERCOT has set some new records for total wind generation. It’s still one of the fastest growing power sources in the world, and is projected to provide as much as 20 percent of the power of the United States by 2030. That’s a lot of power, and a lot of turbines, which explains the massive 350 percent ramp up since 2006. Of course, for an industry that constituted as little as 2 percent of the nation’s energy mix, that may not be as impressive as it sounds. Nonetheless, wind is now big business, and will only be getting bigger thanks to some last minute maneuvers that will give wind 12 billion dollars in subsidies over the next decade. Not only were the tax breaks in question extended, they were even expanded since the structure of the deadlines were changed. It seems, for the next decade at least, that the industry will have the benefit of a favorable political tailwind.
It’s a clean, limitless fuel source found in abundance in large swaths of the continental United States and offshore. It’s as simple as that. The difficulties lie in how to harvest and distribute that resource in an economical and feasible way. Critics contend that the approximately one billion dollars per year in subsidies that help make wind competitive could be better spent elsewhere. However, consider the fact that the United States government also provides between 10 to 52 billion dollars in subsidies and tax breaks to the oil industry alone, an industry that regularly posts record profits. Conventional energy receives as much as 300 billion in any given year, while wind energy has only received 20 billion in taxpayer money over the last three decades. With that in mind, support for this industry is nothing more than a drop of water in a bucket of viscous crude. When the hidden costs of fossil fuels is taken into account as well, such as adverse health effects, global instability, environmental degradation, and climate change, wind power is considerably more affordable, and some reports have shown that Texas wind is highly competitive with natural gas. With prices as low as 2.5 cents per kilowatt hour, depending on the region, it is a good, clean deal.
The Future of Wind
The future of wind is still up in the air. While still red hot in terms of percentage growth, the industry is expected to grow at a slower, lumpier pace for 2013 thanks to long 18-month project cycles. Long term projections, however, are where the wind energy sector really shines. The capacity is expected to triple by 2017, growing to an excess of 500 gigawatts worldwide. Promising developments in the industry, including offshore developments and advances in turbine technologies will help make this power increasingly cost effective. It would appear that for the industry, the prevailing breezes are finally starting to align in a recognizable direction. And where there is wind, there is money.