Commercial Wind Turbine Systems and Applications - Wind Turbine Technology: Fundamental Concepts of Wind Turbine Engineering - page 269

Governmental and Business Environments Affecting
Wind Power Development
The initial growth of the wind energy industry occurred in response to market and regu-
latory forces resulting from the 973 Arab oil embargo that drastically increased the price
of crude oil. Although future social and political considerations will have some effect, the
worldwide prices of oil and natural gas will remain the dominant factors in the future of wind
energy. Past experience has proven that future oil price fluctuations cannot be predicted reli-
ably, and this situation is expected to continue indefinitely. Eventually oil and gas supplies
will be depleted and the world most turn to other sources of energy.
The recent emergence of the global warming issue will change this picture, as nations
move to decrease fossil-fuel burning. Therefore, the future rate of development of wind en-
ergy resources in the world remains uncertain, although the outlook is promising.
U.S. Wind Energy Industry
In the United States in 2007, 33 of the states had wind power installations (see Table
3-3). In 2008, six states have between ,000 and 4,400 turbines, with the highest number
in Texas. While some utilities are now getting more than 0 percent of their electricity from
wind, one of the primary problems facing the U.S. wind industry is a constantly shifting
policy toward renewable energy. Tax incentives for development have been complex and
inconsistent. As an example, in 2008 there are 26 states with Renewable Portfolio Standards
(RPS) that encourage the development of wind power plants and other renewable energy
sources. However, half of these have been created since the beginning of 2004. A national
RPS has been discussed, but its future is uncertain. Also, the goals, measurement criteria,
qualification requirements, and financial incentives are different in each state.
Background on Federal and State Incentives in the United States
Nations responded to the sharp price increases and economic disruption of the early
970s by instituting programs for reducing oil and natural gas consumption and for develop-
ing alternative sources of energy. U.S., federal tax credits of up to 5 percent spurred the
domestic wind industry. Several states, including California, followed the federal example
and created state tax incentives to increase the development of alternate energy sources of all
types, including wind.
In 978, the U.S. Congress passed the Public Utility Regulatory Policies Act (PURPA),
which required every utility to buy electricity from independent producers at its avoided cost .
Avoided cost is the cost per kilowatt-hour that the utility would have to pay for additional
energy and capacity if it were to build new facilities. Although implementation of the new
statute was delayed until the early 980s, PURPA immediately established both a market and
a pricing system for wind-generated power.
The California “Wind Rush”
Even with PURPA, many utilities objected to negotiating power sales contracts with
independent energy producers. These objections dissipated just before the end of 979 in
California, when the California Public Utilities Commission fined the Pacific Gas & Electric
Company $5 million for not considering conservation and alternative energy in its future
generation plans. Major utilities in California began to actively support PURPA by giving
more consideration to independent suppliers of renewable energy.