Thursday, March 28, 2013

US Wind Energy Doubles and Eclipses Natural Gas in 2012

In 2012 the US added 13.1 gigawatts (GW) of wind power, which for the first time is better than natural gas. New US gas capacity in 2012 was around 8,7GW. In total, 40.5 percent of new US electricity generation capacity came from wind power installations as compared to 33.1 percent for natural gas. (Globally, wind added 44.7GW last year).

US installed wind energy in 2012 has almost doubled compared to 2011 (6.8GW). Total US utility-scale wind power capacity, through the 4th quarter of 2012 was at more than 60GW. To get an idea of the significance of surpassing the 60GW milestone, that is enough energy to power more than 15 million homes or the equivalent of almost 50 coal-fired power plants. However, unlike fossil fuels, wind energy offers the compelling benefit of having no emissions. The emissions reductions offered by wind power in the US are equal to taking more than 15 million cars off the road.

The surge we saw in 2012 was largely due to the expedited development of new wind farms that sought to capitalize on the US government's Production Tax Credit (PTC) which was scheduled to expire at the end of 2012. The production tax credit provides 2.2 cents a kilowatt-hour for electricity from wind farms. However, a last minute addendum to the fiscal cliff deal, extended the PTC for one year on Jan. 1, 2013.

The PTC has been a growth engine for the wind industry and it has succeeded in giving investors the confidence to invest. In addition to being a true clean energy alternative, wind energy now provides 37,000 jobs in the US. According to the Wall Street Journal, in the last five years the wind industry has created 75,000 jobs with an average annual investment of around $15 billion.

The fact that US wind energy outpaced gas in 2012 is indicative of the increasing maturity of this renewable resource. “It shows that wind has firmly planted its foothold as a valuable energy source,” said Jacob Susman, chief executive officer of New York wind developer OwnEnergy Inc. “Five years ago we had to drag utilities in kicking and screaming. Now they’ve got teams of experts who understand its value.”

Some have argued that the PTC would not be able to drive wind development in the context of low natural gas prices. The theory holds that as long as natural gas prices remain low, the wind industry will have a difficult time competing. The fact that wind energy did significantly better than natural gas in 2012 makes the point that with appropriate support wind energy can outperform gas.

© 2013, Richard Matthews. All rights reserved.

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