Wind energy sector feeling early effects from stimulus

The Obama administration's sweeping push to expand renewable energy across the West is sparking wind power developers to seek aggressive expansions despite a shaky economy that has slowed the industry.

The reason is the cornucopia of tax incentives and guaranteed loans included in the $787 billion American Recovery and Reinvestment Act.

The Interior Department is moving to open millions of acres of federal land across the West for renewable energy development, and has already announced plans to streamline the permitting and environmental review process for new wind farms, solar arrays and geothermal power plants.

Interior Secretary Ken Salazar estimated this week that about 1,400 megawatts of new wind-power capacity and more than 6,000 megawatts of new solar-power capacity will be ready for construction by the end of 2010. These wind farms and solar arrays could produce enough electricity to power 2.2 million homes.

Wind-power developers aren't waiting. Since President Obama signed the economic stimulus bill on Feb. 17, the industry has started construction on dozens of projects capable of producing more than 1,000 megawatts of electricity -- enough to power about 500,000 homes -- according to the American Wind Energy Association.

Though the uptick in activity is modest compared with last year's record for new wind-power capacity, the new projects provide an early "indicator of the impact the stimulus bill" will have on the wind power industry, said Kathy Belyeu, AWEA's manager of industry information.

Many of the projects under construction had been on hold for months while the industry waited to see how much emphasis Obama and Congress placed on renewable energy in the stimulus legislation.

"Where we once had a downturn on the negative side, there's real optimism now," said Frank Maisano, a spokesman for the law firm Bracewell & Giuliani, which represents wind developers and other energy sector clients. "I think the stimulus bill plays a big part in that."


Presidential push

Obama wants renewable energy to be a centerpiece of a so-called new "green economy," and he has proposed doubling production of renewable energy by 2012.

The administration's commitment to renewables development can be seen in the list of Bureau of Land Management projects unveiled last week that will be funded with the stimulus money, including millions of dollars to conduct numerous programmatic environmental impact statements on the suitability of such projects within specific federally designated energy zones on public land.

Salazar has ordered the formation of an energy and climate change task force to pinpoint energy zones on public land suitable for the development of large-scale wind, solar and geothermal plants. And he announced this week that the department will open new permitting offices in Arizona, California, Nevada and Wyoming, as well as place renewable energy teams in Colorado, Idaho, New Mexico, Oregon and Utah (E&ENews PM, May 5).

The goal is to speed the permitting process for new wind farms, solar arrays and geothermal plants on federal land.

BLM has identified about 21 million acres of public land in Alaska and other Western states that have high wind-energy potential. BLM and the Forest Service are currently evaluating more than 400 applications for wind and solar projects on their land that, if approved, would cover 2.3 million acres in seven states and generate an estimated 70,000 megawatts of electricity -- enough to power more than 50 million homes (Land Letter, March 12).

The potential environmental impact from all these projects has been a source of controversy. The federal government has met resistance from conservation groups that argue industrial-sized wind farms, solar arrays and geothermal plants will destroy wildlife habitat and ruin the sweeping vistas that make many national forests, parks and other public lands so valuable.

To address such concerns, BLM and the Forest Service are holding public meetings in seven states to discuss how best to develop geothermal power on public lands in the West. Geothermal power production on BLM land is expected to more than triple in the next six years.

But the push to expand renewable energy comes at a time when the industry has slowed.

AWEA released a report last week showing that new wind-generated electricity equivalent to 2,836 megawatts -- enough to power 816,000 homes -- came online during the first three months of 2009. That has placed the industry on pace to add about 6,000 megawatts of wind-power capacity for the year -- substantially less than the 8,358 megawatts of new capacity brought online in 2008, according to the Department of Energy.

None of the billions of dollars in the economic stimulus package will be available until the Treasury Department issues formal guidelines outlining how the money will be appropriated, and that probably will not happen until this summer. But its mere existence has caused frozen credit markets to begin to thaw, experts say, allowing energy companies to move forward with planned projects.

"It is significant that financiers are encouraged by what they saw in the stimulus bill," Belyeu said.

Faster than expected

While most experts agreed the stimulus package would have a positive short-term impact on the development of wind-generated electricity, they did not think it would be seen this fast.

One of the key provisions in the legislation is that it extends through 2012 a production tax credit on new wind development that was set to expire on Jan. 1, 2010.

"That's a significant incentive to build those plants," said Alan Beamon, who directs the coal and electric power division within the Energy Information Administration's Office of Integrated Analysis and Forecasting. "There were a lot of projects in the works, and they were probably putting them on hold when they were trying to figure what out was going to happen with the financial crisis."

Beamon was one of the principal researchers on a little-publicized EIA report that concluded the economic stimulus package could result in a "significant expansion in the use of renewable fuels for electricity generation, particularly in the near-term."

The report analyzed not only the impacts of the stimulus package on renewable energy development, but also the consequences of not adopting the stimulus plan. When comparing both scenarios, EIA researchers concluded that wind-generated electricity capacity with the stimulus plan in place would more than double new capacity levels without the stimulus package over the next three years.

Though not quite as dramatic, the EIA also reported the stimulus package would produce significant increases in the development of geothermal energy and biomass.

"We think it is going to have a significant impact," Beamon said.

Mini-boom on private lands

While most future renewable energy projects are projected to be built on public land, the hot spot for wind development in the first three months of 2009 was on mostly private land in the Midwest, where wind farms in Iowa now have greater capacity than all the wind turbines in California, according to AWEA's first-quarter report.

Indiana saw the largest increase in wind-generated electricity during the first three months of the year, with Nebraska and Idaho not far behind.

Indiana's substantial first-quarter increase in wind capacity is due in large part to BP's Fowler Ridge Wind Farm, a sprawling, 57,000-acre complex 90 miles northwest of Indianapolis. Made up of 220 turbines towering more than 26 stories tall, the new facility pumps out enough electricity to power 120,000 homes, making it the largest wind farm in the Midwest.

BP, the country's largest oil and natural gas producer and now a major wind-energy developer worldwide, is so encouraged by recent developments here that it has decided to focus its wind-generation efforts on the United States, said Tom Mueller, a spokesman for BP America in Houston.

"We just see higher potential here in the U.S.," he said

Scott Streater is a freelance journalist based in Colorado Springs, Colo.

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