Despite proposed congressional help, wind industry faces challenges

Feb 20, 2009
by DTN
Despite proposed congressional help, wind industry faces challenges

Advocates of wind energy touted the industry’s potential, while highlighting the potential struggles last week, even as the U.S. Senate passed its version of the stimulus bill that would pump billions into wind energy and investments in upgrading the nation’s transmission grid. The bill includes a threeyear extension of the 2.1-cent federal production tax credit as well as $7 billion in a renewable energy loan guarantee program, which is actually about $1 billion less than in the House stimulus bill. The Senate bill also sweetens the small-wind investment tax credit and would spur construction of new transmission lines for renewable energy to move the electricity from the rural areas to urban populations, or “load centers.”

As the Senate voted, the Farm Foundation was holding a forum on the prospects of wind-energy development at the National Press Club in downtown Washington. Members of the panel talked about the potential, but also painted a realistic picture that doubling wind production or building new transmission grids won’t happen easily even with new funding.

Minnesota farmer Mark Willers, a founding member of Minwind Energy LLC, said more questions should be asked regarding who should own wind towers and transmission lines.

Farmers should be getting a larger share of the benefits for developing these projects, he said. “I think agriculture is asleep at the trigger here, totally,” Willers said.

As wind development expands, there will be growing questions about corporation rights versus landowner rights, Willers said. Questions need to be raised about lease rights and the value of rights that landowners lease or sign in easements to wind companies.

Wind projects are struggling to get off the ground right now because of tight credit, prompting groups such as Minwind to find funding with European banks and investors, he said. Turbine prices are coming down, but those lower machinery prices are being offset by higher interest rates.

Willers and others also noted that the wind production tax credit iis non-refundable, so wind-en wind-energy companies need to find bbusinesses that could use tax write-offs as part- ners. The Th lack of profits right now in corporate America means there are fewer tak- ers for the tax credits, and thus, a slowing of wind de- velopm velopment.

“Trying “Tryi to find tax part- ners nnow is becoming a very ha hard problem,” Will- ers said said. John Holt of the National Rural EElectric Cooperatives reitera reiterated that there are struggl struggles selling the tax credits, and cooperatives are non-pro non-profits so they don’t get to take advantage of the credits.

Co-ops and munici- pal win wind providers instead are gra granted zero percent in- terest bonds, b but Congress is often slow to extend those bonds, making long-term plannin planning a struggle.

Holt also noted an expan- sion of wind development needs tto be backed up with other en energy sources. Wind simply doesn’t generate power on a consistent basis.

“On a hot summer day when everyone is cranking up their air conditioners, chances are the wind turbines aren’t turning,” Holt said. Holt, though, sees the opportunity to mix carbon legislation with President Barack Obama’s push to double renewable energy in three years. A cap or tax on carbon emissions would push electric companies to wind power and other renewable sources.

“If we can overcome our hurdles in this financial crisis, I see wind getting more than its fair share of this,”

Holt said. Former President George W. Bush discussed expanding wind energy to producing 20 percent of the nation’s electricity by 2030. That is a realistic possibility, said Ian Baring-Gould, a researcher for the National Wind Technology Center in Colorado. But such an extensive growth in wind power would require vastly extending and expanding the electrical grid and improving energy generation for individual wind turbines.

“Certainly from a technology standpoint, there is a lot of room to grow as we move forward,” Baring- Gould said. Baring-Gould said two key goals would be to reduce the cost of building and adding wind turbines by 10 percent while increasing efficiency 15 percent.

Right now, wind only constitutes slightly more than 1 percent of electricity. Further, studies cite that expanding the grid to handle 5 percent of the nation’s electricity with wind power could cost up to $80 billion.

Expanding transmission is already a struggle due to logistics and convincing a variety of stakeholders from power companies, community leaders and landowners that there are benefits to new lines. When it comes to expanding the grid, Holt also noted it could take anywhere from four to eight years for a license to develop an expanded electrical grid. Peggy Beltrone, a county commissioner in Great Falls, MT, said she has worked extensively on a 215-mile power line from Montana to Alberta that would create a new 600-megawatt grid and take more than $1 billion in investment. It has taken four years of talks and planning, but construction has not begun yet. “It should have been a slam dunk,” Beltrone said. Beltrone told her story about the Montana-Alberta line to highlight the struggles of extending and upgrading a national transmission grid. “At just 200 miles, it’s just a fraction of the transcontinental challenge,” she said. Beltrone started her discussion also by highlighting that there is a lot of money, development work and future electrical expansion riding on increased government investment in the transmission grid. While it would seem clear that investment would pour into rural America, that may not end up being the case, Beltrone said, with large utilities and others ready to pounce on federal dollars.

“There’s an uneasiness on how transmission funding will be allocated,” she said.