On the same day that Suzlon Group decided to shut its wind turbine blade plant in Pipestone, Minn., city officials in Jonesboro, Ark., were glowing from Friday's grand opening of a $40 million wind turbine manufacturing plant by Denmark-based Nordex.
Some of the woes that led to Suzlon's announcement on Monday, most notably a series of quality-control issues with its blades, were self-inflicted. Still, the parallel universes of a shutdown in one state and a ribbon-cutting in another illustrate the schizoid reality for alternative energy in the United States: great promise and great peril.
In terms of potential, few markets represent as large an opportunity for alternative energy. The United States relies on coal for nearly half our electricity, and we import more than half our crude oil. Coal is plentiful but dirty. Oil is a diminishing resource controlled by many people who don't like us.
Europe gets about 5 percent of its energy from wind, and in some countries the total is 10 percent or more. China, meanwhile, is investing heavily to double wind capacity.
In the United States, we get only about 2 percent of our electricity from the wind, which makes this potentially "one of the biggest wind energy markets in the world," Nordex said at the grand opening last week.
But with no energy policy, the future for wind, solar and other energy technologies depends, to a certain degree, on how well those interests can work the halls of Congress.
To date, things aren't going so well in this department. President Obama has called for 25 percent of the nation's electricity to come from renewable sources by 2025, but efforts to establish federal mandates have failed so far. Despite fierce lobbying by industry proponents, wind and solar energy are caught in the political maw of climate change and cap-and-trade legislation.
As a result, some of the tax breaks and other incentives that spurred massive wind power development in 2009 will expire at the end of this year. That uncertainty has many firms reluctant to commit to new projects.
Juhl Wind Inc. of Woodstock, Minn., has four projects under construction but only one contracted for next year. Eden Prairie-based Wind Energy America Inc. has 15 projects under development, but is actively pushing only three at the moment. "Unless you break ground this year, you don't qualify for the tax credit," said Wind Energy CEO Mel Wentz.
The free marketers out there will say that industries should be able to breathe on their own rather than rely on the iron lung of government incentives and tax credits.
Fair enough, but let's apply that same rationale to the oil and natural gas industries. According to a Treasury Department estimate, just a handful of tax credits for those industries cost the U.S. Treasury about $3 billion in lost tax revenue annually.
Or how about the ethanol industry, which has been able to command a trifecta of mandates, trade tariffs and producer price credits -- all in the names of jobs and energy independence? The tax credit alone was worth an estimated $4.7 billion last year. Extending the tariff, which is set to expire at the end of 2010, has drawn the support of a broad swath of legislators, some of whom have opposed incentives for the solar and wind industries.
"Let's make it a totally free market for everyone and then see what happens," said Dan Juhl, CEO of Juhl Wind.
Wind and solar certainly aren't the answers to all our energy needs. Transmission remains a tricky and potentially expensive proposition, and neither technology will reduce our dependence on foreign oil, since very little oil is used in the production of electricity.
"I'm not as die-hard as some wind advocates, who believe it is the answer to all our problems," said Wentz, who was an executive with a Texas utility before he joined Wind Energy. "Its like your 401(k) or investment portfolio. You want to make sure you're diversified."
Twenty-eight states, including Minnesota, now have a renewable electric standard. This patchwork arrangement will not spur the innovation that will, ultimately, lead to lower prices for these emerging technologies. It's time for Congress to stop huffing and puffing and invest in our future.
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