Countries like China, the United States, and Germany have risen above others in terms of wind capacity; likewise, Texas and Iowa have much higher installed wind capacity than South Carolina and Alabama [1,7,9]. What is the reason for these differences? Variations in public policy certainly help to explain why some states and countries have more installed wind capacity, but is legislation always the sole parameter in wind energy development?
One of the main tax incentives in the U.S. is the Production Tax Credit, a policy which aims to accelerate investment in renewable energy technologies [4]. Many argue that the PTC has been the most effective stimulant in the development of wind energy in the U.S, citing the fact that each time the PTC has expired three times in the past ten years, the expiration has resulted in a decrease in the growth of the wind industry [8]. The PTC is due to expire again at the end of 2012, and because of its effectiveness in promoting growth, legislators are quickly trying to have an extension approved [10].
On a state level, Renewable Portfolio Standards have also been very effective in promoting the growth of wind energy. RPS programs in each state require that a certain percentage of the state’s electricity be generated from renewable sources [2]. Scientists attribute a lot of the growth of the industry to RPS. However, as of January 2012, only 30 states and the District of Columbia have mandated and enforced RPS programs [11].
According to the American Wind Energy Association, Texas tops all states in wind power capacity installed with 10,929 MW, more than double of the second leading California (4,570 MW) [9]. So why is Texas so far ahead? It turns out that public policy isn’t the sole reason. Both Texas and California established RPS programs at around the same time (Texas in 1999 and California in 2002) [3]. However, Texas doesn’t have many additional green laws to support a renewable mandate [2]. According to a Texas energy industry consultant: “Texas installed 25 times more wind than California, even though their laws require more than our laws [in 2007]” [2]. So even though Texas doesn’t have policies focusing on reducing greenhouse gas emission reductions, it has still become the leader in wind deployment.
One of the bigger reasons why Texas has the most installed capacity stems from economic factors. The reason the RPS program in Texas was founded was actually because it was viewed more as an economic opportunity than a response to climate change [2]. Texas has restructured electricity and energy markets which help boost investment [2]. Competition with the rising price of natural gas has also helped the wind industry grow [3]. Stakeholders often look at economic development first, and climate change second.
The same conclusion can be reached when looking at the wind market on a global scale. Despite having an incentive system that requires improvement, China has roughly doubled its installed wind capacity every year since 2005 [5]. In most provinces, the installed capacity has barely scraped the surface of the potential, and at a national level wind power still only amounted to 1.5% of China’s total electricity output [5]. With tailored policy, there is still vast potential for China’s wind power development.
However, there is much evidence supporting the fact that national energy policy may be the most important parameter for stimulating wind development. In Europe, countries such as Germany and Spain utilize feed-in tariffs extremely effectively [1]. These feed-in tariffs are different from tax credits in that they promise project developers a set rate per kilowatt hour for the electricity that they are able to generate [11]. Since their adoption of these feed-in tariff schemes in the 1990s, Germany and Spain have shown significant growth in the deployment of wind energy. Both countries have also amended these policies with different strategies; for example, Germany has also begun to focus on offshore wind farms [1].
Public policy also answers another important question: Why does the U.S. have zero off-shore wind farms? While offshore wind industry in Europe has grown due to government policy and financial incentives, the U.S. has remained far behind in this industry. This is because the U.S. has no international obligation to limit carbon emissions, and it prefers credit programs over carbon taxes, so there is less reliance on offshore wind farms [8]. There also aren’t enough subsidies for wind offshore wind power to be viable and compete on price with conventional energy sources [8]. Due to a lack of government intervention and regulating policies, the U.S. has done little on the offshore front.
While public policy may be one of the more important factors in promoting wind power, it is certainly not the sole reason, for there are lots of social and economic factors. I certainly believe that the policy surrounding U.S. offshore wind farms should be stronger, because a lack of obligation is one of the reasons the U.S. is behind. It’s also important to consider those other factors when determining which policies to establish. Overall, more effective and overarching policies that take economics and social factors into consideration should be implemented because this would definitely result in an increase in wind power deployment.
Citations
[3] The effectiveness of different policy regimes for promoting wind power: Experiences from the States
[4] Development of Wind Energy in the U.S. and China: A Comparative Study
[5] Wind Power in China: Policy and Development Challenges
[6] Survey pegs Texas Renewable Energy Policy as Nation’s Best
[7] Learning from Wind Energy Policy in the EU: lessons from Denmark, Sweden, and Spain
[9] AWEA statistics