American wind energy – AWEA analysis of economic benefits

Continued technological improvements and domestic manufacturing has made wind energy one of the most cost-effective sources of electricity currently available in in the US. It has also become a major economic contributor; the industry has attracted up to $25 billion a year in private investment and has generated as many as 85,000 jobs.

Affordably positioned for growth
Increasingly sophisticated machinery has helped to drive down the cost of producing wind energy in the US by 58% over the last five years. Bolstering the nation's domestic wind manufacturing supply chain also has also helped, as it avoids the transportation costs involved in importing such large components.

Utilities are signing power purchase agreements (PPAs) for wind energy at a record pace: 60 such contracts, totalling over 8,000MW, were entered into in 2013. When announcing these agreements, utilities typically highlight the cost savings for their customers.

For example, MidAmerican Energy - the investor-owned utility controlled by investor Warren Buffett - stated that its planned wind farm in Iowa would come at no net cost to customers and "would help stabilise electric rates over the long term by providing a rate reduction totalling $10 million a year by 2017, commencing with a $3.3-million reduction in 2015".
Industry-wide numbers bear out such statements. The US Department of Energy's annual 'Wind Technologies Market Report' of August 2014 confirmed that wind power prices have reached historically low levels.

Breezy does it
Utilities also like the price stability wind offers. Comments praising its ability to stabilise rates have become almost commonplace in news releases announcing agreements. Since wind farms use no fuel, PPAs can set long-term prices, with contracts typically lasting 20-25 years in the US.
As a result, wind energy is increasingly the first choice for new power in many regions, delivering over 80% of all new electricity generation capacity between 2011 and 2013 in the upper Mid-west.

Looking to the future, the Department of Energy's 'Wind Vision' report, in peer review since it was previewed at the American Wind Energy Association's annual conference in 2014, states that capacity can double by 2020, and provide 10% of the US's electricity -- and then double again by 2030, to 20% of the grid. It projects that by 2050, wind can provide as much as 35% of the nation's electricity. At that point, wind would be one of the leading sources of electric generation in the nation.

Changing states
The outlook becomes all the more compelling when considering that the US industry is so far on track so far to meet the 2030 goal, as outlined in an initial report produced by the Bush administration in 2008. The vision is already becoming reality.
In June, the US Environmental Protection Agency proposed the US's first rule to limit carbon dioxide emissions from existing power plants. States must prepare individual implementation plans to comply with the rule, and wind energy can be a particularly attractive way to do so quickly and affordably.

Emissions missionWind is by far the most cost-effective generation option for reducing emissions. With over 61,000MW now producing zero-emission electricity, the installed fleet is already making a difference. In 2013, wind enabled an estimated 127 million short tons of carbon dioxide to be avoided, which is equal to reducing power-sector carbon emissions by 4.4%, or taking 16.9 million cars off the road.

Liquid economics
Another benefit that's particularly important in some regions is water savings. Droughts from the south-east to the West Coast have highlighted the importance of prudent fresh water use. Wind energy generation led to water consumption savings of 36.5 billion gallons of water in the US last year, which is roughly 116 per person, and when heatwaves threaten to trip off power plants, wind can help keep the lights on.

Construction work on the US's first offshore facilities will finally get under way in 2015: developers of two projects off Massachusetts and Rhode Island say they expect to put steel in the water by the end of the year.

Policy and proper valuation
Wind energy's rapid advance is remarkable, when considering the unstable policy environment in which it has been forced to operate. The federal production tax credit (PTC), wind energy's primary policy driver (as well as the alternative Investment Tax Credit relied on by offshore and community developers), has operated under short-term extensions of usually one and two years. The US Congress has allowed the credit to expire several times before renewing it again, creating a boom-bust cycle for the industry.

Perhaps the best indication of what the industry is capable of doing in a stable policy environment is the dramatic growth between 2005 and 2012, the longest stretch to date during which Congress did not allow the PTC to expire. American wind power saw 800% expansion in this period, and average annual growth of 31%. Total investment in new wind farms reached $105 billion, and the vast majority of all wind power capacity in the US today was installed.

High and dry
In the current rapidly shifting environmental and energy policy landscape, an important goal of the wind industry is a policy framework that appropriately values its attributes, including zero-emissions power with no water use.

An appropriate policy environment will free the wind power industry to realise the Department of Energy's vision of doubling its contribution by 2020, reaching 20% by 2030, and providing over a third of the nation's electricity by 2050.