Renewables

AWEA's Kiernan says challenges to growth possible following tax credit phaseout

What impact are renewable energy industries seeing from the Supreme Court's stay of the Clean Power Plan? During today's OnPoint, Tom Kiernan, CEO of the American Wind Energy Association, says his industry's growth could slow as a result of the stay and the eventual phaseout of the production tax credit. Despite these challenges, Kiernan says the industry could double its current market penetration by 2020.

Transcript

Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Tom Kiernan, CEO of the American Wind Energy Association. Tom, it's great to have you back on the show.

Tom Kiernan: Great to be here. Thank you.

Monica Trauzzi: So Tom, following the Supreme Court's stay of the Clean Power Plan and heading into litigation before the D.C. Circuit, what impact has your industry experienced from the now uncertain future of the power plan? Are investments being pulled back at all? What's the dynamic that you're seeing?

Tom Kiernan: Let me share up front that we do think the Clean Power Plan will win on the merits. That at the end of the day it will be fully moving forward as a result of our opinion and a lot of utilities have a similar opinion, they're moving forward and continuing to purchase a lot of wind and renewables. There are a lot of utilities and a lot of companies moving forward with a low-carbon future.

So we are seeing continued demand for wind energy. Frankly, it's also great to see the cost of wind energy continues to decline. Costs have dropped 66 percent in the last six years and a lot of utilities are buying it just straight up because it's affordable for their customers. It's reliable and just makes business sense and they're just pursuing their kind of no regrets policy of a low-carbon future that's affordable and reliable for consumers.

Monica Trauzzi: There are 19 states who have decided to completely halt their planning on the Clean Power Plan. Does that in some way lead to a slowdown in your industry's growth over the short term?

Tom Kiernan: I think things may slow down a bit, but honestly, right now we're really busy. Partially because of the production tax credit extension, but also, as I said, a lot of utilities are still buying a lot of wind. So we're excited by that.

There are also a lot of companies, industries, whether it's a Wal-Mart or a Google or an Amazon and many others, that are also buying a lot of wind because it just makes great business sense for them. So we're seeing a lot of demand in that part of the industry as well.

Monica Trauzzi: A recent report by the Rhodium Group points to a slowdown in renewable energy generation without the power plan in place, even with the PTC extension, and the analysis points to about 50 gigawatts of utility-scale wind and solar that won't be implemented without the power plan in place. Is policy still the key driver for your industry's growth?

Tom Kiernan: Policy is important and I do want to commend both Republican and Democratic leaders that did extend the production tax credit. Hugely important for us going forward. That'll keep us very energized for the years to come.

There are some challenges in the, say, 2020s and we're analyzing that as well and we need to make sure that we have the transmission policies in place, that we have appropriate funding for R&D for the industry and that many of the states are now looking at improving their renewable portfolio standards.

So there are a lot of things that we can do on the policy front, as you said to ensure a steady, strong growth for the wind industry.

Monica Trauzzi: So you mentioned the PTC. You were given a five-year extension at the end of last year and there's a planned phaseout written in. How are your members preparing for that phaseout?

Tom Kiernan: First, they're excited by the clarity in the next couple of years. We do have a strong PTC and that means companies are able to make the investment that they need. So that's working well. The industry sees that that PTC is phasing down and so they are continuing to drive down costs and continuing to provide more productivity out of the wind farm.

So again, I think we've got a really strong next several years and we'll need to make sure that in the long run, whether it's transmission siting, more funding for R&D that we have other policies to help ensure the industry succeeds.

So many other industries have their enduring support, whether it's gas and others. So we want to one way or another have a level playing field.

Monica Trauzzi: But do you believe that your industry is in a strong enough position now that you won't experience a repeat of what happened in 2012 once that PTC is phased out?

Tom Kiernan: It's hard to project out five, six, seven years. A lot can happen between now and then. There may be some challenges so we're looking at that right now. We'll be looking to our champions and others to figure out the right way through, but again we're appreciative and thankful to Republicans and Democrats that passed that five-year extension because that is really important for the industry, gives us good, strong certainly and, frankly, allows us to grow the industry. We're at 80,000 jobs. We think we can get to 380,000 jobs by 2030. We're at 5 percent wind energy in the country. Can get to 10 percent by 2020. So we have a really bright future and we're excited by that.

Monica Trauzzi: Globally the U.S. is now the leader in generation. Which states are leading the way?

Tom Kiernan: Iowa is the No. 1. Over 30 percent of their electricity is wind energy. That's obviously 24 hours a day, 7 days a week. Over 30 percent.

It's also exciting to see in Colorado for one day this past fall, 65 percent of their electric needs in that day were provided by wind energy.

Down in Texas there was an hour that 40 percent of their electric needs were wind energy. So we're on the grid. We're providing a lot of electricity. So it's exciting seeing that we're reliably doing that and the grid operators are effectively managing it on the grid.

So one grid operator recently on a panel talked about wind as baseload. That they just manage it now on the grid given we're a significant player. It's working very well.

Monica Trauzzi: Oregon is also moving on renewables?

Tom Kiernan: Oregon, I think the governor is signing today, tomorrow the recently passed 50 percent renewable energy by 2030. We saw that down in California, New York, other states. So a lot of states are seeing that it just makes economic sense for their consumers to have a lot of renewable.

The 10 states with the most renewable energy, their electric rates are significantly cheaper than the 10 states with the least amount of renewable energy. So renewable energy just makes good economic sense for consumers and also obviously environmental sense as well.

Monica Trauzzi: You mentioned transmission earlier. What needs to happen on the transmission infrastructure front to support your industry's steady and future growth?

Tom Kiernan: Well let me say yes, to support our industry. Also just to make the grid stronger and more responsive. So we are looking at trying to encourage more transmission from the windy parts of the country to load. That's working with FERC, that's working with state public utility commissions. That's making sure Congress doesn't do the wrong thing.

So we're out there talking about the importance of transmission because it frankly enables affordable, reliable wind energy to get to consumers.

Monica Trauzzi: We'll end it right there. Thank you for coming on the show.

Tom Kiernan: Monica, thank you very much.

Monica Trauzzi: Thanks for watching. We'll see you back here tomorrow.

[End of Audio]

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