By James Osborne WASHINGTON BUREAU
WASHINGTON — A drop-off in wind turbine installations last quarter appears to have been a temporary blip as a surge in new construction forecasts steady growth for the industry through the end of the decade.
Nationwide, developers added turbines with a combined capacity of 310 megawatts between March and July, down from 1,600 during the same period in 2015 and 600 in 2014, according to a recent report by the American Wind Energy Association. At the same time, construction is near historic highs, with more than 12,000 megawatts under construction — and about 40 percent of the new capacity in Texas. The boom follows a decision by Congress last year to extend a critical tax credit for wind developers for five more years that had been feared to be at its end.
“It puts an end to the stop and go,” said Jack Thirolf, head of regulatory affairs for Enel Green Power North America. “It gives us and our suppliers and competitors a better framework for long-term planning, and we definitely expect the market to continue to grow.”
Under the plan approved by Congress, projects begun this year will receive 100 percent of the tax credit, with payments gradually declining to 40 percent in 2019 before they disappear. The IRS has determined that developers would have four years to complete projects in order to qualify, said Max Cohen, senior research analyst at IHS, a research and consulting firm.
The drop-off in installations last quarter was likely a statistical hangover because of an earlier rush to get projects installed in the belief that the tax credit would expire, said John Hensley, manager of data and analysis at the wind energy association. “Now, with the policy certainty, there’s less pressure to bring these projects online quickly,” he said.
Texas continues to lead the nation in wind farm construction. Close to 200 megawatts’ worth of turbines were installed in Texas in the second quarter of 2016, more than twice as much as the next leading state, Kansas. Texas now counts close to 18,000 megawatts of wind capacity, about a quarter of the country’s total.
“This is going to be a pretty good year itself. We see steady but high levels of growth between now and 2020,” Cohen said.
What happens after the tax credit expires in four years? For now, analysts expect a significant slowdown.
But wind developers are finding new customers in companies such as Dow Chemical and Procter & Gamble, which appear to be buying longterm wind power contracts in part to save on electricity costs rather than just meet a corporate environmental goals.