Wind Power in the United States:Technology, Economic, and Policy Issues
Rising energy prices and concern over greenhouse gas emissions have focusedcongressional attention on energy alternatives, including wind power. Although windpower currently provides only about 1% of U.S. electricity needs, it is growing morerapidly than any other energy source. In 2007, over 5,000 megawatts of new windgenerating capacity were installed in the United States, second only to new naturalgas-fired generating capacity. Wind power has become “mainstream” in manyregions of the country, and is no longer considered an “alternative” energy source.Wind energy has become increasingly competitive with other power generationoptions. Wind technology has improved significantly over the past two decades.CRS analysis presented here shows that wind energy still depends on federal taxincentives to compete, but that key uncertainties like climate policy, fossil fuel prices,and technology progress could dominate future cost competitiveness.A key challenge for wind energy is that electricity production depends on whenwinds blow rather than when consumers need power. Wind’s variability can createadded expenses and complexity in balancing supply and demand on the grid. Recentstudies imply that these integration costs do not become significant (5-10% of wholesale prices) until wind turbines account for 15-30% of the capacity in a givencontrol area. Another concern is that new transmission infrastructure will be requiredto send the wind-generated power to demand centers. Building new lines can beexpensive and time-consuming, and there are debates over how construction costsshould be allocated among end-users and which pricing methodologies are best.Opposition to wind power arises for environmental, aesthetic, or aviationsecurity reasons. New public-private partnerships have been established to addressmore comprehensively problems with avian (bird and bat) deaths resulting from windfarms. Some stakeholders oppose the construction of wind plants for visual reasons,especially in pristine or highly-valued areas. A debate over the potential for windturbines to interfere with aviation radar emerged in 2006, but most experts believeany possible problems are economically and technically manageable.Federal wind power policy has centered primarily on the production tax credit(PTC), a business incentive to operate wind facilities. The PTC is set to expire onDecember 31, 2008. Analysts and wind industry representatives argue that the on-again off-again nature of the PTC is inefficient and leads to higher costs for theindustry. While there is often bipartisan support for the PTC in Congress, debatecenters more fundamentally on how to offset its revenue losses. A federal renewableportfolio standard which would mandate wind power levels was rejected in theSenate in late 2007; its future is uncertain.If wind is to supply up to 20% of the nation’s power by 2030, as suggested bya recent U.S. Department of Energy report, additional federal policies will likely berequired to overcome barriers, and ensure development of an efficient wind market.