As the Senate takes up climate and energy measures, what changes will be made to the renewable electricity standard and transmission provisions? During today's OnPoint, Elizabeth Salerno, director of industry data and analysis at the American Wind Energy Association, explains why a recent report card by AWEA gave transmission a grade of C-minus. She discusses T. Boone Pickens' scaled-back wind farm plans. Salerno also explains what changes her organization would like to see made to the climate and energy bills making their way through the Senate.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Elizabeth Salerno, director of Industry Data and Analysis at the American Wind Energy Association. Liz, it's great to have you on the show.
Elizabeth Salerno: Thank you for having me, Monica.
Monica Trauzzi: Liz, oilman T. Boone Pickens made a very highly publicized announcement last year that he would be building the world's largest wind farm in Texas. And he recently announced that he would be downgrading those plans and building a series of smaller farms around the country. What does this announcement say about state of the wind energy industry? He cited transmission as one of the main issues to building this big wind farm.
Elizabeth Salerno: Certainly, Mr. Pickens' announcement really actually is an opportunity to highlight really how critical transmission is to expanding renewable and specifically wind energy in this country. Without a comprehensive national plan on transmission it will be difficult to reach increasing levels of wind penetration in the country. However, Mr. Pickens' announcement was that while he may not move forward with that specific project, he's going to move forward with several projects around the country and is still very much committed to wind energy.
Monica Trauzzi: He cited cost as a concern as well. What's happened in your industry over the last year and a half that would cause such a turnaround like we've seen from him and has your industry been impacted more than other industries as a result of the financial downturn?
Elizabeth Salerno: Obviously, the current economic situation is impacting every sector, not only within energy, but across the spectrum of the economy and wind is no different than that, than any other sector. And we are going to see an impact in the wind energy industry, but what's lucky is at the end of 2008 we had a historic high in terms of annual wind installations and we are still seeing growth in the first and second quarter of 2009. And so while the growth rate may have slowed a little bit, we're certainly seeing growth and expect that to continue to grow into the future. So, we expect no real slow down. It's only a temporary downturn across the economy, but we hope to see that turnaround.
Monica Trauzzi: So, AWEA recently released a wind report card and it gave transmission a C-. What are some of the key issues in the U.S. relating to transmission?
Elizabeth Salerno: Transmission, as identified in the Department of Energy's 20 percent wind energy report released last year, is one of the key hurdles and challenges that's going to have to be overcome to really increase wind power in this country. But not only is it important for wind power, but all energy sources in terms of maintaining electric reliability for our transmission grid. But what actually this does highlight is the need for a more broad energy policy that will really help us move forward and create the paradigm shift we need in our energy policy. In the U.S. transmission really goes hand in hand with the national renewable electricity standard which would set the national market for renewable energy and with that market will come transmission because they work together as a planned energy policy.
Monica Trauzzi: So let's talk about what's happening in both of those areas on the policy front.
Elizabeth Salerno: Sure.
Monica Trauzzi: Because transmission is addressed in the energy bill that came out of the Senate Energy and Natural Resources Committee. It's now making its way through other committees with jurisdiction. Does the transmission piece go far enough? Does it put the U.S. on the right track?
Elizabeth Salerno: We were very happy to see not only a national renewable electricity standard, but also a transmission bill come out of the Senate Energy and Natural Resources Committee. Those are two of the most critical policy pieces to move wind energy and other renewables forward in this country. The transmission bill in the Senate committee does address the three main issues that are needed in terms of federal leadership, which are planning, permitting, and paying for the transmission. The three Ps which we like to call it. And it does address those very well. There was an amendment that was introduced in the bill that was finally accepted that undermines the ability to do cost allocation or paying for the transmission that I think eventually we would like to see removed. But the bill itself is fairly comprehensive and blended or combined with the RES I think we would really open up the floodgates for the renewable energy in this country.
Monica Trauzzi: On the RES though, but the House and Senate released what many considered weakened versions of the renewable electricity standard and that the targets were not where they should be or where they need to be. What's your take on that?
Elizabeth Salerno: The Renewable Electricity Standard, and a strong one at that, is really not only the most critical piece to move development forward in this country, but also build out the manufacturing base in this country. Manufacturers who are willing and on the sidelines ready to invest millions of dollars in a manufacturing infrastructure in this country need a long-term, stable signal that there will be a market in this country for several years to come, so they can recoup their investment. And so both bills, in the House and the Senate, we would like to see increase in their overall target, but more particularly a near-term aggressive target for the first year of the program is absolutely critical to allow the wind industry to continue to grow at the rate we've growing over the past few years.
Monica Trauzzi: Are our goals for renewable energy just simply too lofty here in the U. S.? I mean do we need to pare them back a bit until we address some of these issues like transmission?
Elizabeth Salerno: Absolutely not! I think the thought is they all move forward together as a complementary set of policies. We can not only address our climate change global issues, but also economics in this country and energy security if we combine all of these policies together and move them forward in one comprehensive piece. That will send the world a signal that the U.S. is not only committed to address the climate change problems and our emissions, but we're also committed to creating American jobs by building out a foundation for a new energy sector in this country with manufacturing and also address energy security through an energy source that has a very stable price over its life, which is particularly valuable in terms of consumer savings.
Monica Trauzzi: So, the Obama administration is backing renewables heavily. Are energy markets being distorted at all by all of this funding through the stimulus through other means for the wind energy sector, for solar energy?
Elizabeth Salerno: It's quite the opposite. There's so many benefits to pursuing domestic clean energy resources, that they are here at home, that they have a stable price, that they have economic benefits and obviously a benefit to the environment. And so there's no reason that we should not be fully committed to renewable energy with a variety of policies that will move them forward. They're still certainly just beginning to take some market share in terms of the power generation mix in this country and so backing it with the support of not only Congress, but the White House and certainly the public which has voted through polls 70 percent in support of a 25 percent RES by 2025. And so with that broad range of support there's no reason we should back down from renewable energy.
Monica Trauzzi: With new rules in place at financial firms how are these expensive projects going to be funded from this point forward?
Elizabeth Salerno: Obviously, within the energy sector capital expenditures have been pulled back as the capital markets have also pulled back and everyone is reassessing where the best investments are. But what's amazing is in the first quarter of 2008 we installed 2800 megawatts of wind and we expect to see a strong second quarter as well. And the end of this year, while it may not be as strong as 2008, which was a historic high globally, we'll still have a very strong year. Perhaps the second strongest year in history. And so while capital expenditures are being pulled back, we are still seeing money flow towards wind energy projects because they are such a great investment in terms of mitigating our risk towards climate change and creating price stability.
Monica Trauzzi: So, then what's the prospect for green job development within your industry?
Elizabeth Salerno: Green job development is probably one of the most exciting areas not only within wind, but for our economy as a whole. In 2008 35,000 new jobs in the wind industry were created and 55 new manufacturing facilities were either announced or came online or expanded. I don't know any other energy sector or other sector in general that has had that type of employment growth. And so we expect that to continue as long as we have a long-term, stable policy like a strong national renewable electricity standard in place, that we will see tens of thousands of jobs being added every single year, not only in the construction and operations of these projects, but the manufacturing base, which is such a key part of our economy in the U.S.
Monica Trauzzi: OK, we'll end it right there. Thanks for coming on the show, Liz.
Elizabeth Salerno: Thank you so much.
Monica Trauzzi: And thank you for watching. We'll see you back here tomorrow.
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