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Is the U.S. Wind Industry Losing Ground? PDF Print E-mail

Is the U.S. Wind Industry Losing Ground?

October 8, 2010 by Taylor Johnson  

Weve all read the news that the United States has, after four years of remarkable growth, relinquished its position as the most attractive country for renewable energy investments. But rather than state the news, I want to discuss why we are slowly slipping behind our foreign competitors.

One key factor in the U.S. decline is the failure of congress to provide any form of certainty to the market. Youve no doubt heard that the pleas for a national Renewable Energy Standard (RES) have fallen on deaf ears as senators and representatives shy away from legislation that may negatively impact their re-election chances in November. Several pieces of pro-renewable energy legislation have been proposed and brought before Congress, but in the spirit of partisan behavior our beloved congress has failed to produce any results. As such, the tax credits and cash grants that have led to a booming renewable energy economy over the last four years are coming to an end, and no legislation is in place to support the industry afterward. On top of this (and a bit of a side note) the Bush Tax Cuts are coming to an end as 2010 concludes. Although this is not directly related to renewable energy, increasing tax rates also increases the level of investment uncertainty in our country.

So why is Congress having such a hard time passing a bill that will both improve our economic future and decrease our dependence on foreign energy? In a word: Money. It all boils down to money, cold hard cash. Businesses and their lobbyists are working away on Capitol Hill, whispering in the ears of our representatives, planting the idea that if the federal government supports renewable energy development than energy prices will jump to a level that is too high for businesses to maintain their global competitive advantage. Unfortunately this is just not the case. In fact, the U.S. has by far the lowest energy costs in the world. Our national average (commercial) price is under $0.05/kWh whereas our nearest competitor, China, spends roughly $0.11/kWh. Though, even if we were to put that point out of the way, there is still enough evidence to refute these anti-renewable energy lobbyists in just one point. The implementation of a national 15% Renewable Energy Standard will only increase our energy costs by a fraction of one cent per kilowatt-hour.

Furthermore, this discussion of costs is only looking at the short-term cost increases and brings into account the possible decommissioning of old and heavily polluting coal-fired plants. However, if we were to look at the long-term outcome we would find that the costs level out, or hit an equilibrium point, after somewhere in the neighborhood of 30 years. As we look further into the future, say 50 or 60 years, renewable energy and the hedge that it provides will likely prove beneficial on a national cost perspective.

Now, to wrap up my thoughts, Id like to address the issue of infrastructure and innovation right here in the U.S. of A. Though we as a nation have among both the highest wind and solar potential in the world, we are severely behind in manufacturing infrastructure and innovation advances. Often we make the mistake of assuming that the U.S. is the worlds thought-leader, and that we inherently have (almost) the right to innovate while other countries will manufacture and produce. Though this may have been the way of the past, countries like China, India, and South Korea are stepping up to the plate while simultaneously we as a country are withering away, unsure of our future, and afraid (at least Congress is) to take a stance and become the leader in renewable energy.

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