By KATE GALBRAITH | Published: January 9, 2013 | The New York Times | www.nytimes.com
AUSTIN, TEXAS – Last week, global wind turbine manufacturers heaved a sigh of relief after the U.S. government extended a tax credit considered crucial to the industry.
But 2013 will still bring challenges to wind developers around the world. In the United States, long-term uncertainty about the tax credit – which was extended for only one year, after considerable political tension – will continue. Growth in China is expected to slow, a casualty of constraints on the electric grid. And Spain, an important market in Europe, has stalled.
“The industry’s rate of growth will slow substantially in the coming few years,” the Brussels-based Global Wind Energy Council said in a report released in November. A global deal to put a price on planet-warming carbon dioxide emissions would bolster the outlook for wind power, the report said, but such a deal seems unlikely.
The U.S. tax credit extension was unexpectedly folded into legislation to avert a fiscal crisis. It came as a rare piece of good news for the wind power industry, which has taken political fire from conservatives for relying so heavily on a government incentive. The United States is one of the largest markets for turbines in the world. Wind farms that are under construction by the end of this year can claim the credit, which is valid for 10 years.
Nevertheless, Vestas Wind Systems, a Danish turbine manufacturer, “anticipates a significant reduction in 2013 installations, relative to previous years” in the United States, said Michael Zarin, a company spokesman. This is because the tax credit extension, while welcome, came so late, he added. Vestas went through painful layoffs at some of its American facilities last year.
U.S. wind development has been dwarfed by that in China, where the industry has grown at an astonishing rate. “Five years ago, almost no one was talking wind in China, and today it’s the largest market in the world,” said Matt Guyette, the strategy and marketing leader of General Electric’s renewable-energy business.
However, the Global Wind Energy Council does not “expect significant growth in the Chinese market until after 2015,” its report said. The country has a huge and expanding appetite for electricity, but wind farms have been built so quickly that some have had to shut down because the grid system lacks the ability to transport the power from remote, windy regions to the big cities.
Europe, with its goal of 20 percent renewable energy by 2020, has been “a relatively large and stable market,” Mr. Guyette said. The largest onshore wind farm in Europe, which is in Romania and became fully operational last month, has hundreds of G.E. turbines.
But Spain has cut its renewable energy subsidies amid a budget crisis. Portugal has also slowed down, according to Mr. Zarin of Vestas.
Within Europe, “you are seeing some of the southern regions with greater challenges,” whereas northern regions are showing relative stability, Mr. Guyette of G.E. said.
Britain, with significant offshore wind development, has been a bright spot, along with France, where the government has made a “firm decision to develop offshore wind,” said Paul Copelman, a spokesman for Iberdrola Renewables, the U.S. arm of a Spanish utility.
But Germany has elections this year, and “of course a lot will depend on the outcome of that,” said Stefan Gsänger, secretary general of the World Wind Energy Association, based in Bonn. However, he expected no major changes in German support for renewable power, which has accompanied its decision to phase out nuclear power.
A promising region is Latin America, which has few wind farms but is warming to the concept as its need for electricity grows. “Brazil, Chile and Mexico are significant emerging markets,” Mr. Zarin of Vestas said.
In the United States, some wind power developers are beginning to focus on wind farms in other countries. They are frustrated by the wrangling over the U.S. tax credit, which will undoubtedly flare up again by next autumn because the tax credit is due to expire at the end of this year. Wind developers in the United States have also been stymied by the falling price of electricity, which is traceable to the rapid spread of hydraulic fracturing and the enormous supplies of natural gas for power plants that this has produced.
Walt Hornaday, president of Cielo Wind Services, a wind developer based in Austin, Texas, said that countries with relatively high power prices and limited natural resources presented opportunities. His company has begun looking at Canada and Latin America as potential markets for wind farms.
“There’s a lot of places in the world that don’t have giveaway prices of natural gas,” Mr. Hornaday said.
A version of this article appeared in print on January 10, 2013, in The International Herald Tribune.
URL to article: https://www.wind-watch.org/news/2013/01/09/challenges-ahead-for-wind-power-developers/