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he USNEA also precipitated an ampliied R&D budget for wind power
development. By 1981, with a barrel of oil at approximately US$90—4.5
times the level of a decade earlier—expenditures on wind R&D rose to
approximately US$125  million; by 1982, the wind R&D budget topped
US$150 million. By comparison, Germany, the nation with the second high-
est wind R&D expenditures during that era, spent about US$50 million on
wind R&D in 1982. 24 his ampliication of inancial support proved to be
instrumental in kick-starting the development of an American wind turbine
manufacturing sector and bringing down the cost of wind power.
Unfortunately, the structure of the USNEA sufered from two weak-
nesses. First, the tax credits under the ETA were granted for capital invest-
ment rather than for power produced. As result, the ETA became a tax
shelter for wealthy individuals and less attention was given to the reliability
of these early turbines. Second, PURPA's stipulation that power from renew-
able technologies be purchased by utilities at avoided cost made it diicult
for private turbine owners to generate project proits. he larger utilities
had the ability to construct larger wind power projects, reaping the beneits
of economies of scale. his then became the avoided cost that owners of
smaller projects would receive. he result of these two weaknesses was that
the USNEA failed to catalyze much in the way of wind power development
on a national scale. By 1980, there was still only 8 MW of installed wind
power capacity in the country (see Figure 7.2).
here was, however, one state where wind power development took hold.
In 1978, the California legislature, which had passed a 1976 state act to pro-
vide private investors with a 10% tax credit to cover the expenses of devel-
oping solar energy projects, expanded the tax credit to include wind power
projects. Unfortunately, early wind power projects were fraught with plan-
ning and execution problems that deterred investment. 25 As result, the state
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Figure 7.2 . Wind Power Development in the United States (1980-2012)
Source : Combined data from GWEC, Earth Policy Institute, Worldwatch, AWEA.
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