State government may have done more for wind power than PTC ever did.
Jeff Price, PhD, is an industry analyst for Frost & Sullivan’s North American Fuel Cell, Photovoltaics and Wind Power Market Service subscriptions.
Supporters of wind power in the United States are rejoicing over a two-year extension of the federal wind energy Production Tax Credit (PTC) included in the economic stimulus package signed into law on March 9. The industry lobbied hard for the extension, arguing the tax credit has been critical to the growth of wind power in the United States, and projecting stagnation and possible demise of the industry if Congress did not re-enact the PTC. Although federal regulators have been working to establish conditions that will foster more open markets for electricity, including greater use of renewable energy, there are many other factors stimulating growth in U.S. wind power development that have not made the news and are, in fact, more important than the PTC.
So far, restructuring of the electric industry has occurred primarily through actions taken by individual states. Because attributes of wind energy provide significant social benefits-such as zero emissions and renewable energy supply that are not fully reflected in the market price-state governments have used public funds for a variety of programs promoting renewable energy resources and technologies. These include tax incentives, direct payments, low-cost capital programs, distributed power policies, consumer choice programs, environmental regulation, Renewable Portfolio Standards (RPS), and deregulation of wholesale, transmission, and retail markets. Our analysis of state policies and incentives for wind power indicates that the PTC has not provided as much stimulus to the market as green power programs, state renewable portfolio standards, investment tax credits, and low-cost loans.