Statement of Jaime Steve, Legislative Director, American Wind Energy Association

Testimony Before the Subcommittee on Select Revenue Measures
of the House Committee on Ways and Means

April 19, 2007

Chairman Neal and members of the committee, my name is Jaime Steve and I serve as Legislative Director for the American Wind Energy Association (AWEA) based here in Washington, D.C.  

Mr. Chairman, today’s typical wind turbine can generate as much as two megawatts of electricity, or enough power to meet the needs of about 540 households.  It is also interesting to note that:

• Texas is now the #1 wind-producing State in the nation, having recently surpassed California which held that claim for over 20 years.
• The Statue of Liberty’s torch is powered through a purchase of wind energy.
• Starbucks, Safeway, and Staples are all purchasing wind-generated electricity.
• Examples of wind energy jobs include 500 workers building towers at Beaird Industries in Shreveport, LA and another 350 workers building towers at DMI Industries in West Fargo, ND.
• Wind developers pay about $5,000 per turbine, per year for 20 years in lease payments to hard-pressed farmers, ranchers and other land owners from Maple Ridge, NY to Abilene, TX.  Wind projects also make significant contributions to the local tax base of many rural communities.
• A single wind turbine avoids the same amount of carbon dioxide as is emitted by about 4,800 cars.

These examples show that supporting wind and other forms of clean, renewable energy means creating jobs, spurring rural economic development, stemming global warming, and enhancing our national energy security. 

And, the best way to invest in renewable energy is through long-term extensions of the renewable energy tax credits and bonds, specifically:

1) The renewable energy Production Tax Credit (or PTC) which expires

     December 31, 2008

2) The existing solar Investment Tax Credit -- with the addition of small wind

    systems used to power homes, farms, and small businesses, and

3) Clean Renewable Energy Bonds for non-taxpaying, public power entities.

These incentives are needed because wind energy is still not yet fully cost competitive with mature electric generation technologies.  In fact, over the last two years, wind energy costs have been increasing, making the Production Tax Credit even more crucial than before.

First, a thank you to Reps. Pomeroy and Ramstad for their bill, H.R. 197, aimed at providing a 5-year extension of the PTC through December 31, 2013.  This bill now has 75 cosponsors, ten of whom are members of this panel.  I also thank Reps. Blumenauer and Cole for their bill (H.R. 1772) to open the separate investment tax credit for solar power systems for use by individual landowners who purchase small wind systems.  The history of these incentives in this committee clearly shows that support for renewable energy tax credits has always been a bipartisan issue.

Since 1999, the PTC has expired and been extended five times – always for short one-or-two-year periods and more often than not with economically painful periods of expiration between extensions.  The effect has been to create a boom-and-bust cycle that stops us from achieving further cost reductions and holds back our potential.  Simply stated: when the credit is available, we produce jobs and clean energy … when it is not available we lose jobs and build very few new projects.  Access to a long-term PTC can break this boom-and-bust cycle, and allow wind energy to become an even far greater contributor to our energy mix.

In 1998 wind energy produced enough electricity to power about 500,000 homes and wind was virtually a California-only industry.  Today, Texas has surpassed California as the top wind energy producing state and high-tech wind turbines are operating in 30 states producing the equivalent amount of electricity needed to power about 3 million American homes – or, about the amount of energy used by the entire population of the state of Virginia.  This growth has been driven in large part by access to short-term PTC extensions.  Imagine what we could do with a long-term extension.

A long-term PTC would spur increased development of wind and other renewables, while also creating much-needed manufacturing jobs, particularly in the Midwest.  A long-term extension also would reduce the cost of wind power to consumers.  Industry estimates indicate that a 10-year PTC would deliver thousands of megawatts of new wind power and a 15 percent reduction in the cost of electricity produced from wind.  A shorter 5-year extension would deliver about half as much power and about half (roughly 8 percent) of the cost reductions.  In a nutshell, a long-term extension would eliminate the every-other-year turbine manufacturing cycle by allowing large investments in the supply chain for turbine components.  This ability to plan and invest would create jobs, and reduce costs and stem price increases for wind turbines, thus lowering energy costs to consumers.

Mr. Chairman, to keep providing new jobs, spurring rural economic development and addressing global warming, the wind industry needs long-term access to renewable energy production tax credits, investment tax credits and bonds.   

We all ask Congress to pass long-term extensions of these tax credits at full value so that we can keep the tower factories humming from Shreveport, Louisiana to West Fargo, North Dakota.  We’ll also keep making much-needed land rental payments to farmers and ranchers, from Maple Ridge, NY to Abilene, TX. 

Thank you,

___________________________

Jaime Steve, Legislative Director, American Wind Energy Association

1101 14^th  Street, NW 12^th Floor

Washington, D.C. 20005

202-383-2506

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Background:  The U.S. wind energy industry installed over 2,400 megawatts (MW) of new generating capacity in 2006, making wind one of the largest sources of new power generation in the country and a mainstream option with which to meet growing electricity demand. One megawatt of wind power produces enough electricity on average to serve 250 to 300 homes.

AWEA’s annual industry rankings provide a standard reference point for tracking the growth of wind power in the U.S.  The rankings (as of December 31, 2006) are the following:

Top Five Wind Energy Producing States

(Expressed in megawatts (MW) of capacity):

            State                          # of MW

Texas is firmly established as the leader in wind power development, with over 2,700 megawatts of new wind generation installed at the end of 2006, and some 1,000 megawatts currently under construction.  Iowa and Minnesota look likely to break the 1,000 MW mark in 2007.  Washington will come close, with the 140-MW Marengo project that is currently under construction there. 

Top Five Largest Wind Farms

Operating in the U.S. (Size is expressed in Megawatts (MW))

                  Project                    # of MW      Project Owner

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Five PTC expirations and extensions since 1993:

In place: January 1, 1993 through June 30, 1999

1) Credit expired: June 30, 1999

Extended: December 1999 through December 31, 2001 (credit made retroactive to July 1, 2001)

CREDIT UNCERTAIN FOR 6 MONTHS

2) Credit expired: December 31, 2001

Extended: March 2002 through December 31, 2003 (retroactive to January 1, 2002)

CREDIT UNCERTAIN FOR 3 MONTHS

3) Credit expired: December 31, 2003

Extended: September 2004 through December 31, 2005 (retroactive to January 1, 2004)

CREDIT UNCERTAIN FOR 8 MONTHS

4) Extended: August 2005 through December 31, 2007

FIRST TIME CREDIT EXTENDED BEFORE EXPIRATION DATE

5) Extended: Oct. 2006 through December 31, 2008

SECOND TIME CREDIT EXTENDED BEFORE EXPIRATION DATE