AWEA white paper: Renewable Production Tax Credit has driven progress and cost reductions, but the success story is not yet complete

Press Release

Sep 10 2015

Washington, D.C., September 10, 2015 – With a two-thirds reduction in the cost of wind energy over the last six years, the renewable Production Tax Credit is on track to achieving its goal of a vibrant, self-sustaining wind industry.

Washington, D.C., September 10, 2015 – With a two-thirds reduction in the cost of wind energy over the last six years, the renewable Production Tax Credit is on track to achieving its goal of a vibrant, self-sustaining wind industry.

That is the remarkable conclusion of analyses by national laboratories, consultants, and other independent experts and summarized in a new white paper, Wind Energy and the PTC: Sustaining an American Success Story(Opens in a new window). The summary of wind cost trends and expert analysis was released today by the American Wind Energy Association (AWEA), as Congress returns to consider a tax policy “extenders” bill now pending in the Senate.

As the new white paper says, “The cost of wind energy fell by more than half over the last five years, bringing the wind industry a significant distance down the road to achieving cost parity. The key now is staying on that cost reduction trajectory – by maintaining the policy stability that made it possible – so that cost parity can be reached.”

The Production Tax Credit (PTC) and alternative Investment Tax Credit (ITC) have enabled private sector investments in the American workforce, domestic manufacturing, and R&D that have significantly reduced the cost of wind energy. Recent technological advances include advanced materials for longer blades and taller towers that reach stronger winds at higher altitudes and allow all regions to deploy utility-scale wind energy. The PTC has also enabled private sector investment in a diverse supply chain with more than 500 wind manufacturing facilities in 43 states, driving economies of scale and reducing the cost of transporting large turbine components.

The PTC was included in a tax extenders bill that U.S. Senate Finance Committee passed on a 23-3 vote on July 21, 2015. It would extend for two years the 2.3 cents per kilowatt-hour tax credit for projects that start construction by the end of 2016. Sen. Chuck Grassley, R-IA, said in July, “Certainty and predictability in tax policy are necessary so businesses can plan and invest accordingly, which is important for job creation.” The bill is now pending in the full Senate.

Secretary of Energy Ernest Moniz told Politico in August that even with this recent success, a continued incentive makes sense and will benefit consumers. “It’s about continued cost reduction,” Moniz said.

“In good wind locations, we are basically in the five cents per kilowatt-hour range, but that’s in the best wind sites,” Moniz said last month. “So we just released a report this week that says if we raised the hub heights, we go to longer blades, etc., basically if we can capture lower-quality wind resources, there’s a tremendous expansion opportunity in the United States, literally opening up the footprint for effective wind by a half to two-thirds.”

Wind natural gas

The white paper also explains how the investments in domestic manufacturing and the American workforce – and the cost reductions they have achieved – can be abruptly lost if we do not finish the job.  Last week, for example, wind industry supplier Dokka Fasteners shut down a factory in Michigan due to uncertainty over the federal tax credit. As Dokka explained in its Sept. 1 press release, “The landscape for wind energy is volatile based on a lack of a committed U.S. renewable energy policy, gridlock of government in Washington, and the uncertainty of the production tax credit.”

The AWEA white paper builds on work by national laboratories documenting how stably-priced wind energy protects consumers against uncertain and rising prices for other fuels.

By diversifying our energy mix with zero-fuel-cost wind energy, consumers are protected against fuel price increases and volatility, much like a fixed-rate mortgage protects homeowners against interest rate increases.

“The renewable energy PTC has been a tremendous success in driving technology improvements and cost reductions, but we need to finish the job,” said AWEA CEO Tom Kiernan. “You don’t push a boulder 90 percent of the way up a hill only to stop a few feet short and let it roll back down.”

“We’re building some of the best infrastructure this country has ever seen, and getting clean electricity literally from thin air, with no fuel price risk for consumers,” Kiernan said. “Now is not the time to push a promising American industry off a cliff by failing to renew a policy that has been such a success.” 

Gov. Terry Branstad, R-Iowa, whose state has led the way with nearly 30 percent of its electric generation now coming from wind power, said last week that its early commitment to renewable energy “has created jobs, increased family incomes, provided more consumer choice, and established Iowa as a model for how our nation can become energy independent.”

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