Environmental Engineering Reference
In-Depth Information
Factors Affecting the Market for Wind Turbines
Initial markets for wind power in the United States in the 970s were driven by oil pric-
es. At the time many thermal power plants used heavy oil for fuel. During the early 980s
the economic growth in California caused increasing demand for power that further fueled
early wind markets. Following the oil embargos and to reduce atmospheric emissions, many
plants shifted from oil to natural gas. This change and decreasing electricity consumption
reduced the demand for wind power in the United States during the 980s.
Incentive Factors
Since 990, wind energy has again been recognized as a good source for meeting in-
creasing demand for electric power. As the wind technology matured, turbine prices declined
with increased production volume, and by the turn of the century wind power represented one
of the largest new sources of electric capacity additions in the United States. It is clear that
wind power plants can be installed quickly and in increments to match increasing demand
for electricity. Following are several significant factors driving the current growth in wind
energy.
Federal Renewable Production Tax Credit
(PTC)
The PTC directly affects the economics of power projects by providing a tax credit to
owners of
qualifying facilities.
The PTC provides a 2.0 cent per kWh tax credit (adjusted for
inflation) for electricity generated in the first 0 years of operation to new projects brought
on-line by the end of 2009. At that time the PTC is scheduled to expire again. A wind power
plant that is producing electricity for sale to a third party is a
qualifying facility
.
Renewable Portfolio Standards
(RPS)
and State Mandates
Some states have established rules called RPS stating that a certain portion of the elec-
tricity that utilities sell must come from renewable sources. While the objectives and con-
ditions of RPS and other state mandates vary widely among the some 26 states with such
laws, these standards are providing an impetus to renewable energy development. This is
particularly true for the stricter standards, such as those that make the RPS mandatory with
specified renewable generation requirements and penalties for non-compliance. Differences
in RPS provisions include variations such as
-
what renewable energy sources will be counted
-
whether power can come from existing renewable capacity or must be from new
capacity
-
what percentage of generation must be renewable and when
-
how much of a challenge meeting that requirement will be from within the state
-
generation base from which the state starts measuring compliance
-
whether the provisions are mandatory or voluntary
-
whether renewable energy credits, as established by many RPS programs, may be
traded
The
North Carolina Solar Center
maintains the
Database of State Incentives for Renew-
ables & Efficiency
(DSIRE), which contains summary information on portfolio standards for
each state.
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