|
FOR IMMEDIATE RELEASE |
Texas' Renewable Energy Policy Is Nation's Most Effective, Survey Shows |
|
WASHINGTON, DISTRICT OF COLUMBIA, Mar. 21 -/E-Wire/-- The minimum renewable energy requirement adopted by Texas under Governor Bush is the most effective policy any state has recently adopted to promote renewable energy, a new survey finds.
|
The survey of state incentives and policies for wind energy, performed by the American Wind Energy Association (AWEA), lists by state the various incentives and policies adopted to promote wind power. These measures include tax credits, low-interest loans, research programs, and legislative requirements such as the minimum renewable energy requirement, or Renewables Portfolio Standard (RPS), successfully enacted in Texas.
|
"Simply put, states can jump-start the local market for wind energy by adopting an effective Renewables Portfolio Standard," said AWEA executive director Randall Swisher. "Such a policy needs to be done right, however, and Texas is demonstrating just how to do that."
|
The law that triggered the present Texas wind rush is the RPS included in the state's electricity restructuring legislation. Six other states have adopted an RPS, some as part of restructuring laws, but none with the stunning results of Texas. Texas legislators were careful to:
|
· set the requirement high enough to trigger market growth;
|
· make the requirement apply across the board to all electricity providers;
|
· base proof of compliance on tradable renewable energy credits, which ensure flexibility and least-cost implementation of the requirement; and
|
· set penalties for non-complianceall features that are often missing from the RPS adopted in other states.
|
As a result, some 600 MW of new wind energy projects and 100 MW of other renewable energy projects are currently proposed or under development in Texas. By the end of 2001, high-tech wind turbines totaling over 800 MW in generating capacity may be reaping some 2.5 billion kilowatt-hours (kWh) annually from the state's high winds, enough to serve about 200,000 Texas households, according to AWEA estimates.
|
The RPS is an effective policy to promote new investment in renewable energy whether a state restructures its utility industry or not, AWEA said.
|
[More than 20 states currently provide limited economic or financial incentives for wind energy. The majority of these incentives are targeted towards small wind systems or installations, and usually take the form of a income tax credit, sales tax credit, low-interest loan or net metering. These incentives begin to offset the cost of a residential wind system, which can be high up-front even if it generates savings over the long term. The most effective incentive for small wind systems is the rebate, or "buy-down," currently offered in California and Illinois, which cuts the cost of a new wind system by up to 50% in California and 60% in Illinois. Few states currently provide economic or financial incentives for utility-scale wind energy, in spite of their potential effectiveness.]
|
"An overlay of a map of the nation's wind resources with that of installed wind farms demonstrates that state policies are a determining factor in the development of wind energy," said Christine Real de Azua, the lead author of the report.
|
Public policies and incentives for wind energy are still very much needed even though the cost of wind energy at good sites is now competitive with that of conventional power sources, Real de Azua said. "Conventional energy sources are heavily subsidized, so incentives for wind energy help level the playing field for the wind energy industry.
|
"Moreover, even when economic calculations show that wind is the most affordable energy source, as they often do nowadays, utilities and businesses can remain reluctant to invest in wind because they are unfamiliar with the technology or because it comes with high up-front costs," Real de Azua said. "That's when policies such as an RPS can help them make the right economic decision."
|
The report is available on AWEA's Web site at http://www.awea.org/pubs/inventory.html
|
**** The following is relevant background information about wind energy in the U.S. and the world.
|
Growth of the Wind Energy Industry
|
- Total worldwide wind capacity today is approximately 17,000 MW, enough to generate about 34 billion kilowatt-hours of electricity each year. This is about the same amount of electricity as 5 million average California households (containing 12.5 million people) use.
|
- Wind energy was the world's fastest-growing energy source during most of the 1990s, expanding at annual rates ranging from 25% to 35%. In 2000, about 3,500 MW of new wind capacity (close to a $4 billion investment) was installed around the world, but only 53 MW of that total, or a little more than 1%, was installed in the U.S. However, AWEA expects as much as 1,800 MW of new wind capacity to be installed in the U.S. this year.
|
- Leading states in terms of installed wind capacity as of December 2000 are California (1,646 MW), Minnesota (272 MW), Iowa (242 MW), and Texas (188 MW).
|
- U.S. wind potential is enormous--many times the amount installed. California, for example, could conservatively install an estimated 5,000 MW of wind capacity. Other western states have much larger potential--e.g., Wyoming has more than 10 times California's. The U.S. is, quite literally, a "Saudi Arabia of wind," with vast resources throughout the Plains states.
|
Market Drivers Behind Wind Energy's Growth
|
(1) Federal government policy: The federal government provides a tax credit of 1.5 cents per kWh (adjusted for inflation) for electricity generated by a wind plant during its first 10 years of operation. This credit is intended to "level the playing field" for wind, which must compete with other energy industries that receive billions of dollars in federal subsidies each year. The wind energy credit will expire at the end of this year unless it is extended by Congress.
|
(2) State government policy: Several states, as part of electric utility restructuring legislation, have enacted policies to encourage clean energy sources like wind. The state of Texas, for example, has passed a law requiring the construction of 2,000 MW of new renewable energy generation by the year 2009, of which wind is expected to capture a major share. New wind projects of 160 MW, 208 MW, and 82.5 MW have been announced in Texas within the past few months.
|
(3) Declining costs: The cost of producing electricity from wind energy has declined by more than 80%, from about 38 cents per kilowatt-hour in the early 1980s to a current range of 3 to 6 cents/kWh (levelized over a plant's lifetime not including the federal wind energy Production Tax Credit (PTC)). However, the cost of electricity from a wind plant varies based on its size and the average wind speed. A large plant (50 MW and up) at an excellent site (20 mph average) can deliver power for 3 cents/kWh or less; electricity from a small plant (3 MW) at a moderate site (16 mph) may cost up to 8 cents/kWh. In the not-too-distant future, analysts believe, wind energy costs could fall even lower than most conventional energy sources, reaching an unsubsidized cost of 2.5 cents/kWh.
|
(4) The green power market: As the electricity market becomes more competitive, utilities and other power suppliers are looking for ways to differentiate their products. One of the best ways to do that is to offer "green power"--electricity from clean energy sources like wind--at a premium price. Today, over 190 utilities nationwide are selling wind-generated electricity as part of green power programs, and consumer demand for green power (even though still very small) is beginning to result in the building of new wind power projects, including some in southern California.
|
Clean Energy Policy Options
|
(1) Renewables Portfolio Standard (RPS): The RPS is a "minimum content requirement," which specifies that a certain minimum percentage of electric power must be generated from renewable energy sources (wind, solar, and others). Typically, RPS legislation provides that the minimum percentage increase gradually over time to encourage the sustained, orderly development of the renewable energy industries. Several states, including Texas, have enacted RPS laws, and the concept is also being considered by the U.S. Congress. More information on the RPS is available from http://www.awea.org/policy/index.html#RPS.
|
(2) Production Tax Credit (PTC): The U.S. government currently provides a tax credit of 1.5 cents per kilowatt-hour (adjusted for inflation) for all the electricity generated by a new wind plant during its first 10 years of operation. Under current law, the credit is scheduled to expire at the end of 2001. The American Wind Energy Association (AWEA) is seeking its extension for at least five years. More information on the PTC is available from http://www.awea.org/policy/index.html#PTC.
|
(3) Incentives for Small Wind Turbines: Tax incentives or rebates help make the purchase of a small wind turbine for household use more attractive to potential buyers. California currently provides a rebate of up to 50% of the purchase price of a small turbine, and that has helped to sharply increase demand for the units in the state.
|
(4) Disclosure of Energy Sources: AWEA also supports "disclosure" laws, which require sellers of electricity to inform customers of the sources of energy (coal, nuclear, natural gas, etc.) that are used to generate the electricity. Such information is important for consumers to be able to make intelligent choices in a competitive marketplace.
|
(5) Fair Transmission Policy: The nation's electricity transmission system operates based on rules that were designed to fit the characteristics of fossil fueled power plants. Congress should take appropriate steps (including guidance to the Federal Energy Regulatory Commission and the emerging Regional Transmission Organizations) to ensure that wind energy is not disadvantaged in the market simply because it is an intermittent power source.
|
Benefits of Wind Energy Development - Wind energy provides both environmental and economic benefits. Windy counties profit from wind development through:
|
(1) Tax Payments: Every 100 MW of wind development generates about $1 million in property tax revenue. Development of another 2,000 MW of wind this year will mean $20 million annually in tax revenues to rural communities.
|
(2) Jobs: Every 100 MW of wind development creates about 500 job-years of employment. Installation of 2,000 MW will result in 10,000 job-years.
|
(3) Payments to landowners: The development of 2,000 MW in the U.S. will mean annual payments of approximately $4 million to farm and ranch landowners.
|
(4) Stable electricity prices: A recent study (January, 2000) found Iowa's electric utility customers could save over $300 million over a 25-year period if a proposal to meet 10% of the state's electric demand through wind energy is adopted. The savings result because the cost of fossil fuels is expected to rise over time, while wind's costs decline. Savings in California, where prices have skyrocketed because of supply constraints, would be enormous.
|
(5) Reduced emissions of pollution and greenhouse gases: A single 660-kW wind turbine will displace emissions of 1,100 tons of carbon dioxide (the leading greenhouse gas), 6 tons of sulfur dioxide (the leading component of acid rain), and 4 tons of nitrogen oxides(the leading component of smog) every year, based on the U.S. average utility fuel mix. 375 acres (more than half a square mile) of forest would be needed to absorb the same amount of CO2.
|
Quotation
|
"Many windy states are considering today how best to tap their wind resources. With the right policies, they can jump-start the wind energy market and begin to watch the benefits blow in year after year."--Randall Swisher, AWEA Executive Director.
|
AWEA, formed in 1974, is the national trade association of the U.S. wind energy industry. The association's membership includes turbine manufacturers, wind project developers, utilities, academicians, and interested individuals. More information on wind energy is available at the AWEA web site: www.awea.org
|
