The news from the wind industry last week didn’t look good.
The booming business of minting money out of thin air had imploded between 2012 and 2013, as this chart from the American Wind Energy Association (AWEA) shows.
According to the AWEA, a Washington, D.C.-based trade group, wind turbine installations hit a record 8,385 megawatts in the fourth quarter of 2012 only to crash in the first quarter of 2013 to 1.6 megawatts—and, yes, the decimal place is in the right place. In other words, thousands of wind turbines went online at the end of 2012 to power about 2.1 million American homes. Three months later, about one more turbine had been installed, generating just enough juice to supply about 405 homes.
The downdraft continued in the first quarter of this year, according to the AWEA, when 133 turbines producing 433 megawatts went online. That’s certainly an improvement over the first quarter of 2013 but it's abysmal compared with the first quarter of 2012, when 1,695 megawatts were installed.
Coal barons must be popping the champagne, right? Not quite. According to this chart from the AWEA, a record 13,000 megawatts’ worth of wind farms were under construction in the first three months of this year.
What gives? The United States Congress. Or more precisely, Congress gives a lucrative tax incentive to the wind industry and then takes it away every couple of years or so. The federal Production Tax Credit (PTC) pays wind energy producers a 2.3-cent premium for every kilowatt-hour generated during the first decade of a project’s operation. Uncertainty over whether Congress would let the PTC expire at the end of 2012—it did—created a lot of dead air as investors fled the industry.