In 2020, the U.S. installed more wind energy capacity than it has in any year ever. The year before, wind energy became the country’s top source of renewable energy, helping the U.S. consume more renewable energy than coal energy for the first time in more than 130 years since the switch away from wood fires.
“Wind has been a tremendous success story especially in recent years,” said Abby Watson, head of government affairs for Siemens Gamesa, a wind turbine manufacturer.
The demand for wind energy has created a demand for wind energy equipment. There is now a manufacturing base in the U.S., and Siemens Gamesa has plants in Kansas and Iowa.
In particular, 2020 was a record year for wind installation, partly because the industry had been building up to it for some time. For five years straight, the federal government had been offering a tax credit to producers of wind power.
“Last year was what happens in a market when you have policy and market certainty,” said JC Sandberg, chief advocacy officer at the American Clean Power Association, an industry group representing renewable energy companies.
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Ironically, last year was also what happens when that certainty runs out. Spending on subsidies has been controversial; the federal incentive was set to end at the end of last year.
“So you had this big rush to get your wind power plant online so it could get this incentive,” said Claudia Hitaj, a research and technology associate with the Luxembourg Institute of Science and Technology. That tax credit was ultimately renewed for another year, at a lower level.
This cycle of on-again, off-again incentives —tax credits, specifically — has been going on for decades. “It started in 1992, and then it expired for the first time in 1999, and since then, it’s expired a total of 13 times,” Hitaj said. Each time, you never really knew if it’d be extended, she said: “And so whenever this expiration year rolled around you had this big rush.”
On the one hand, these government motivators have been good enough that the U.S. now has the third-highest per capita wind power generation in the world. On the other hand, we are a distant third — behind Denmark and Germany. The U.S. total capacity is half of China’s, and manufacturing in the U.S. has been held back in some ways.
“That cyclicality is something that has been extremely challenging for the industry, especially for manufacturers. Manufacturing facilities are not designed to ramp up and ramp down in an efficient fashion,“ Watson said.
Manufacturing related to onshore wind has been able to take root in the U.S. in part due to the very nature of the technology. Some of the parts are immense in size and cannot easily be transported long distances over land; the closer to their destination they are built, the better.
So the nacelle — the section of a wind turbine perched atop the tower — and the blades are assembled in the U.S. But outside of those parts, the instability of government support has prevented some types of manufacturing from flourishing domestically, according to Dan Ancona, vice president for renewable energy at consulting firm Princeton Energy Resources International.
“One of the problems,” Ancona said, “is a lot of the high-value stuff, you know, the big gear boxes and some of the electronics and the generators, much of that is being imported.” Even though it doesn’t have to be, he added.
Manufacturing related to offshore wind is particularly sensitive to government support because the transportation of oversized components can be done more easily via ship. “You could bring those in from anywhere,” Watson said.
There’s legislation currently in Congress designed to hold tax credits for production and manufacturing for wind energy in place until 2028, and be phased out from there. Those in the wind energy industry argue such credits are necessary to hasten decarbonization and get on a fair footing with fossil fuels.
“Every energy industry has a financial incentive built into it,” Ancona said. “Like oil and gas, those were instituted in the ’20s and ’30s and made permanent.”
However, the industry based on wind must contend with something much more fickle than the breeze: Congress.
“Our political winds here are kind of our nemesis,” Ancona said. “It blows hot and cold, depending on particular views.”