Even though new installations fell sharply in 2010, the industry enjoyed strong federal and state incentives to invest in new wind facilities, which will keep the playing field attractive through 2012 when the current Production Tax Credit (PTC) expires. The U.S. wind industry has frequently experienced sharp up-and-down cycles largely because of the lack of consistent policy. Europe has led in establishing renewable energy goals and it is no accident that it has developed the most mature wind technologies and infrastructure. In the U.S., 29 states have adopted renewable targets for utilities operating within their boundaries but there is no federal equivalent. The U.S. wind industry has called for a national Renewable Energy Standard (RES) to provide long term investor confidence in the sector. But a draft law was not approved by the Senate in 2010 and its prospects of passage appear unlikely. The closest thing it received was a 2008 technical report issued by the U.S. Department of Energy that studied and proposed a growth scenario for the U.S. to pursue a strategy where wind would provide 20 percent of the country’s energy requirements by 2030. To achieve that 20 percent scenario, new wind power installations would have to increase to more than 16,000 MW per year by 2018 and continue at that rate through 2030.
The domestic content in U.S. wind installations was 35 percent in 2005 and is currently 60 percent. The number of workers directly and indirectly employed by the wind energy industry is estimated at 75,000 and growing. It seems legislators would be eager to support this rare case of industrial insourcing and job creation, but unfortunately it is more likely the U.S. Congress will again wait until the eleventh hour or later to renew or revamp the PTC. The current gridlock among Washington lawmakers over so many substantive issues reinforces the argument that a PTC will not be passed by election year 2012. Even Vestas, the world’s largest wind turbine manufacturer, stated in its third quarter 2011 financial report that the industry will enter 2013 with no PTC extension and no federal RES.
What does that mean for composites demand? Most likely there will be a very busy 2012 with developers attempting to complete construction on new wind farms before incentives expire at the end of the year. That could translate into wind projects of 6,000 to 10,000 MW in 2012, then demand in 2013 will probably decline sharply. Should the PTC disappear entirely, the remaining state incentives will stimulate a modest level of demand (4,000- 6,000 MW) but certainly nothing close to the volume the industry has been gearing up for and aspired to sustain.