Tuesday, June 3, 2008

Texas, a leader in wind energy generation

T. Boone Pickens is a man who knows a good business opportunity when he sees one.
Pickens is investing $2 billion in the Pampas Wind Project on 400,000 acres of the Texas Panhandle. That money will purchase hundreds of wind turbines from General Electric and jump start a plan that will eventually cost $10 — $12 billion and power 1.3 million homes.

Pickens is also a man who recognizes the necessity of government action to make wind power economically feasible. Pickens said: “I believe that Congress will recognize that it is critical not only to this project, but to renewable energy in this country, that they enact a long-term extension of the Production Tax Credits.” (May 28, 2008 Celsias)

The federal Production Tax Credits provides tax credits of 2 cents per kilowatt hour, to utilities that generate electricity from wind power. The bill is set to expire in December 2008.

Texas has been a major center for the development of wind powered electricity generation. This is partially due to the vast, windy open spaces in Texas – but many other mid-western states could say the same. What really has set Texas apart, has been far thinking, activist state government.

Texas’ leadership began in 1999 when model Renewable Portfolio Standard was signed into law by then-Governor George Bush. A renewable energy standard is government policy that requires utilities to provide a certain amount of renewable energy over a specified time.

Texas State Representative Steve Wolens, one of the sponsors of the Renewable Portfolio Standard, says he had to fight the utilities to pass the legislation: “ They [utilities] didn't want to be required to do any more than they would have to. And they resisted the renewable and the reusable, number one, because it was a lot. It was a lot more than they'd ever been required to do, because in Texas, they had been required to do nothing. And they didn't know what the expense was going to be. They did not want to have the expense forced on them.” (PBS interview 2001)

But once the law passed, it created an incentive for firms like FPL Energy to build in Texas some of the biggest wind plants in the country, and sparked a nearly decade long boom in wind generation in Texas. Even with the Renewable Portfolio Standard, federal tax credits still have been important. The Production Tax Credit which is due to expire December 2008, has expired several times in 1999, 2001 and 2003, said Real de Azua a spokeswoman for the American Wind Energy Association. Each time the credits expired wind power installation dropped significantly in each year following expiration of the credits, and resurged each time the credit was reenacted. (May 28, 2008 Celsias).

Industry analysts expect that wind power, (like other government subsidized technologies such as integrated circuits) will eventually stand on its own without government subsidies, but still requires tax incentives to reach that point. (Christian Science Monitor 2006) A fact clearly acknowledged by Mr. Pickens.

No comments: