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Posted by Energetic
North Dakota's wind energy capacity will likely grow by more than a third in 2012, driven by renewable energy standards and the uncertain future of a federal incentive.
The state's operating wind farms have the capacity to generate 1,378 megawatts of electricity. Between projects that are under development now and some that are likely to go forward soon, the state could add almost 500 additional megawatts, according to Public Service Commissioner Kevin Cramer.
"That would mean that 25 percent of the nameplate capacity of electricity is generated by wind," he said. "If you look at North Dakota's growth, the speed of that growth is really pretty remarkable."
Cramer cites five projects that are under construction or that he expects to be soon started and completed by the end of 2012. Among them are expansions of the Bison Wind developments by Minnesota Power in Oliver and Morton counties, the expansion of the Oliver Wind developments, also in Oliver County, and a 150-megawatt project in Rollette and Towner counties.
"I fully expect that 150-megawatt project to be built," he said.
Next year could be a busy one for the wind industry across the country as developers work to complete projects before a key incentive is scheduled to expire. The federal production tax credit gives companies 2.2 cents per kilowatt-hour of electricity, but it is uncertain whether Congress will renew the subsidy in light of struggles in Washington over spending.
"You can't put odds on it, but certainly, it's a 50-50 proposition," said Josh Gackle, regional policy manager for Minnesota-based advocacy group Wind on the Wires. "It's not really helpful for developers or utilities trying to make long-term plans."
Wind advocates like Gackle want a long-term subsidy for wind power from Washington to avoid a boom-bust cycle in the industry. The American Wind Energy Association has called for a four-year extension of the tax credit, arguing that its expiration in 2004 led to a drop in wind installations of 77 percent.
Gackle said that developers are in the boom part of the cycle while the tax credit is still in effect.
"Developers and utilities are now in the mood to take advantage of what little certainty is left," Gackle said.
According to AWEA, there are 7,354 megawatts of generation capacity under construction across the country, more than any time since 2008.
Eric Norberg called the Dec. 31 deadline to qualify for the tax credit "a hard end date," but as president of a company devoted to renewable energy, he said that market demand for wind will remain an incentive for the industry.
In June, Norberg's company, Allete Clean Energy, was spun off from Allete Inc., the company that owns Minnesota Power. A regulated utility, Minnesota Power is constrained in the investments it can make in new power generation capacity.
"It allows us to get into other forms of energy and in other regions," Norberg said about the new company. The independent clean energy company will pursue wind and even solar projects that will provide renewable energy to Minnesota Power and allow it to meet Minnesota's clean energy mandate.
"It's not a matter of if, it's a matter of when," Norberg said.
Minnesota has required that 25 percent of electrical generation should come from renewable sources by 2025. That standard is likely to drive more wind development if the industry loses the federal subsidy.
"It would be one of the remaining market incentives out there," Gackle said.
Xcel Energy has a stiffer requirement of having 30 percent of its electricity come from renewable sources by 2030. Cramer said that the utility has said that it planned to develop 250 megawatts but has not built anything yet. He expects that utility to eventually install something in North Dakota.
Aside from uncertainty over federal funding for wind, constraints on the industry are still a limited transmission capacity to move electricity to distant markets and the weak demand due to a stagnant economy.
"Until the economy picks up and demand picks up, frankly, there's a glut of energy in market right now," Cramer said.
But despite that, there are still companies positioning themselves to meet the demand for wind energy.
"There are still some people who are out there trying to make some moves," Cramer said.