Being well-known for its potential to offer clean and abundant electricity, wind power has become one of the fastest-growing energy sources around the world.
By 2030, the Department of Energy of the USA, has estimated that wind power could constitute 20 percent of the nation’s electricity supply. The USA has passed Germany to become the country producing the most wind power. The cost of wind power fell sharply as it came closer to the cost of electricity from conventional fuels, due to being aided by technological innovation and years of government subsidies.
In spite of this, in 2011-2012, weak demand for electricity, cheaper options from Asian competitors and stiff opposition from inexpensive natural gas have left American wind companies buffeted.
There has been an increase in the larger trade tensions between China and the USA, as the former has moved into the American market by selling underpriced goods due to generous state subsidies. To curb this, the United States Commerce Department in July 2012, has imposed tariffs on Chinese steel turbine towers after discovering that manufacturers had been selling them for less than the cost of production.
The Dec. 31 expiration of a federal tax credit that makes wind power more competitive than other sources of electricity, has caused a big problem in Washington for the industry.
With support from both parties, the Congress has periodically renewed the tax break, costing $1billion annually. This has become a wedge issue in the presidential contest this year. To tout his support for the subsidy, President Obama has traveled to wind-heavy swing states like Iowa, whereas, the Republican nominee Mitt Romney, opposes the wind credit. Having galvanized the Republicans in Congress against it, this move perhaps dooms any extension or at least delays it until after the election despite an eleventh-hour promoting effort from supporters.
The production tax credit subsidizes wind power by 2.2 cents a kilowatt-hour. Industry executives and analysts say that its impending expiration has made project developers nervous about investing or going forward.
The taxpayers’ investment has produced an inadequate profit since wind represents a small percentage of total electricity generation. Hence opponents contend that the industry has had enough time to wean itself from the funding.
Problem of Chinese Strategy of Dominance
Having forced many foreign rivals out of business with its wind turbine and solar panel factories, China has established global dominance in renewable energy. Environmentalists around the world regard its policy makers as visionaries.
Currently, China’s policy is in disarray since it has created surplus and a price war. This is because its manufacturing capacity has risen faster than the worldwide demand for wind turbines over the last five years.
Source: New York Times: Wind Power