Coal plant plan stokes cost questions

By Des Moines Register


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If the Iowa Utilities Board decides to let Alliant Energy build a coal-fired electricity generator at Marshalltown, Alliant's customers will pay for the plant in their regulated rates.

But if the board turns down the Alliant request, the utility's customers won't get off free. They'll still pay for the electricity - not in the regulated rate portion of their bill, but on the "fuel adjustment cost" line in the monthly statement.

That's where utilities such as Alliant pass through their extra charges, such as for natural gas and other fuels. Alliant said in a Feb. 28 filing with the Securities and Exchange Commission that in 2007, one-third of the power it provided its customers was bought from other utilities or independent generators.

The cost of that power is passed along to customers as a fuel adjustment. That cost has gone up in recent years as the price of utility fuels - primarily natural gas and coal - has risen.

"Our whole point in asking for this new plant is that we don't want the Iowa economy to be subject to the volatility of the national wholesale electricity market," said Tom Aller, Alliant senior vice president who heads the utility's Iowa operations. "We want to be less reliant on purchased power."

Opponents said the choice between new generation and purchased power is spurious.

"We say that Alliant doesn't need either new coal-fired generation or purchased power, but can operate with increased efficiencies and by adding more wind generation," said John Perkins of the Iowa Office of Consumer Advocacy, which has opposed the Marshalltown plant proposal.

"We're not Arizona or Nevada, with their huge growth rates," Perkins said. "There's no need to build the plant. Alliant can wait until at least 2016 to see what other technologies come along that will be cleaner than coal."

Environmentalists decry the 649-megawatt plant's added carbon dioxide emissions, which have been tied to climate change.

But, said utility consultant Robert Latham of Cedar Rapids, a former Iowa Utilities Board staff member and Alliant executive: "In today's market, a utility doesn't want to be a buyer of electricity. The price has more than doubled in this decade."

Plant supporters said that without more electricity generation, Iowa could become vulnerable to sudden outages and price spikes, most notably manifested in California's electricity crisis of 2000-01.

"Iowa is not going to be another California," said Latham, who has been an independent marketer of wholesale electricity since 1995. "But people who say a utility like Alliant should just sit back and buy power should know better."

Since the wholesale electricity markets were deregulated by the Clinton administration in 1995, utilities trade electricity as a commodity through what are known as reliability zones. Alliant is a member of the Midwest Independent System Operators, or MISO, a consortium of utilities, generators and transmission systems extending from the Pennsylvania-Ohio border through Illinois and Iowa and north into Canada.

Electricity differs from other commodities in an important way: It can't be stored. When shortages develop, look out.

"The price for wholesale electricity can jump all over the place, especially on hot days when demand rises," Aller said.

Wholesale power is getting more expensive. At the beginning of this decade, wholesale power sold for $20 to $30 per megawatt hour - 2 or 3 cents per kilowatt hour. Latham said that price has roughly doubled in this decade, largely due to runups in the prices of natural gas and coal.

During March, wholesale power averaged between $50 and $75 per megawatt hour on the MISO system, according to the Federal Energy Regulatory Commission.

During peak demand periods, the wholesale price on the MISO system has shot as high as $80 per megawatt hour, according to federal figures. In other regions, most notably California and Texas, prices have exceeded $300 per megawatt hour.

Latham noted that "for a utility, its own generated power is the cheapest power it can get. If it has to buy power to meet peak demand, that power will be more expensive, and that drives up the cost."

Alliant's increased dependence on purchased power is in contrast to Iowa's other major utility, Des Moines-based MidAmerican Energy.

"While Alliant has to buy a third of its power, MidAmerican is a net seller of one-third of its power. It comes down to generation capacity," Latham said.

Alliant's reliance on purchased power is, to some extent, its own doing. The company sold the Duane Arnold nuclear generating station at Palo to FPL of Florida in 2006 for $331 million. Aller said the sale was done not only to cut operating costs but also to free Alliant from the time and expense of having the plant relicensed. Alliant now buys power generated at Duane Arnold from FPL under long-term contracts.

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Environmentalist calls for reduction in biomass use to generate electricity

Nova Scotia Biomass Energy faces scrutiny as hydropower from Muskrat Falls via the Maritime Link increases, raising concerns over carbon emissions, biodiversity, ratepayer costs, and efficiency versus district heating in the province's renewable mix.

 

Key Points

Electricity from wood chips and waste wood in Nova Scotia, increasingly questioned as hydropower from the Maritime Link grows.

✅ Hydropower deliveries reduce need for biomass on the grid

✅ Biomass is inefficient, costly, and impacts biodiversity

✅ District heating offers better use of forestry residuals

 

The Ecology Action Centre's senior wilderness coordinator is calling on the Nova Scotia government to reduce the use of biomass to generate electricity now that more hydroelectric power is flowing into the province.

In 2020, the government of the day signed a directive for Nova Scotia Power to increase its use of biomass to generate electricity, including burning more wood chips, waste wood and other residuals from the forest industry. At the time, power from Muskrat Falls hydroelectric project in Labrador was not flowing into the province at high enough levels to reach provincial targets for electricity generated by renewable resources.

In recent months, however, the Maritime Link from Muskrat Falls has delivered Nova Scotia's full share of electricity, and, in some cases, even more, as the province also pursues Bay of Fundy tides projects to diversify supply.

Ray Plourde with the Ecology Action Centre said that should be enough to end the 2020 directive.

Ray Plourde is senior wilderness coordinator for the Ecology Action Centre. (CBC)
Biomass is "bad on a whole lot of levels," said Plourde, including its affects on biodiversity and the release of carbon into the atmosphere, he said. The province's reliance on waste wood as a source of fuel for electricity should be curbed, said Plourde.

"It's highly inefficient," he said. "It's the most expensive electricity on the power grid for ratepayers."

A spokesperson for the provincial Natural Resources and Renewables Department said that although the Maritime Link has "at times" delivered adequate electricity to Nova Scotia, "it hasn't done so consistently," a context that has led some to propose an independent planning body for long-term decisions.

"These delays and high fossil fuel prices mean that biomass remains a small but important component of our renewable energy mix," Patricia Jreiga said in an email, even as the province plans to increase wind and solar projects in the years ahead.

But to Plourde, that explanation doesn't wash.

The Nova Scotia Utility and Review Board recently ruled that Nova Scotia Power could begin recouping costs of the Maritime Link project from ratepayers. As for the rising cost of fossil fuels, Ploude noted that the inefficiency of biomass means there's no deal to be had using it as a fuel source.

"Honestly, that sounds like a lot of obfuscation," he said of the government's position.

No update on district heating plans
At the time of the directive, government officials said the increased use of forestry byproducts at biomass plants in Point Tupper and Brooklyn, N.S., including the nearby Port Hawkesbury Paper mill, would provide a market for businesses struggling to replace the loss of Northern Pulp as a customer. Brooklyn Power has been offline since a windstorm damaged that plant in February, however. Repairs are expected to be complete by the end of the year or early 2023.

Ploude said a better use for waste wood products would be small-scale district heating projects, while others advocate using more electricity for heat in cold regions.

Although the former Liberal government announced six public buildings to serve as pilot sites for district heating in 2020, and a list of 100 other possible buildings that could be converted to wood heat, there have been no updates.

"Currently, we're working with several other departments to complete technical assessments for additional sites and looking at opportunities for district heating, but no decisions have been made yet," provincial spokesperson Steven Stewart said in an email.

 

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Growing pot sucks up electricity and pumps out an astounding amount of carbon dioxide — it doesn't have to

Sustainable Cannabis Cultivation leverages greenhouse design, renewable energy, automation, and water recapture to cut electricity use, emissions, and pesticides, delivering premium yields with natural light, smart sensors, and efficient HVAC and irrigation control.

 

Key Points

A data-driven, low-impact method that cuts energy, water, and chemicals while preserving premium yields.

✅ 70-90% less electricity vs. conventional indoor grows

✅ Natural light, solar, and rainwater recapture reduce footprint

✅ Automation, sensors, and HVAC stabilize microclimates

 

In the seven months since the Trudeau government legalized recreational marijuana use, licensed producers across the country have been locked in a frenetic race to grow mass quantities of cannabis for the new market.

But amid the rush for scale, questions of sustainability have often taken a back seat, and in Canada, solar adoption has lagged in key sectors.

According to EQ Research LLC, a U.S.-based clean-energy consulting firm, cannabis facilities can need up to 150 kilowatt-hours of electricity per year per square foot. Such input is on par with data centres, which are themselves 50 to 200 times more energy-intensive than a typical office building, and achieving zero-emission electricity by 2035 would help mitigate the associated footprint.

At the Lawrence Berkley National Laboratory in California, a senior scientist estimated that one per cent of U.S. electricity use came from grow ops. The same research — published in 2012 — also found that the procedures for refining a kilogram of weed emit around 4,600 kilograms of carbon dioxide to the atmosphere, equivalent to operating three million cars for a year, though a shift to zero-emissions electricity by 2035 could substantially cut those emissions.

“All factors considered, a very large expenditure of energy and consequent ‘environmental imprint’ is associated with the indoor cultivation of marijuana,” wrote Ernie Small, a principal research scientist for Agriculture and Agri-Food Canada, in the 2018 edition of the Biodiversity Journal.

Those issues have left some turning to technology to try to reduce the industry’s footprint — and the economic costs that come with it — even as more energy sources make better projects for forward-looking developers.

“The core drawback of most greenhouse environments is that you’re just getting large rooms, which are harder to control,” says Dan Sutton, the chief executive officer of Tantalus Labs., a B.C.-based cannabis producer. “What we did was build a system specifically for cannabis.”

Sutton is referring to SunLab, the culmination of four years of construction, and at present the main site where his company nurtures rows of the flowering plant. The 120,000-square foot structure was engineered for one purpose: to prove the merits of a sustainable approach.

“We’re actually taking time-series data on 30 different environmental parameters — really simple ones like temperature and humidity — all the way down to pH of the soil and water flow,” says Sutton. “So if the temperature gets a little too cold, the system recognizes that and kicks on heaters, and if the system senses that the environment is too hot in the summertime, then it automatically vents.”

A lot is achieved without requiring much human intervention, he adds. Unlike conventional indoor operations, SunLab demands up to 90 per cent less electricity, avoids using pesticides, and draws from natural light and recaptured rainwater to feed its crops.

The liquid passes through a triple-filtration process before it is pumped into drip irrigation tubing. “That allows us to deliver a purity of water input that is cleaner than bottled water,” says Sutton.

As transpiration occurs, a state-of-the-art, high-capacity airflow suspended below the ceiling cycles air at seven-minute intervals, repeatedly cooling the air and preventing outbreaks of mould, while genetically modified “guardian” insects swoop in to eliminate predatory pests.

“When we first started, people never believed we would cultivate premium quality cannabis or cannabis that belongs on the top shelf, shoulder to shoulder with the best in the world and the best of indoor,” says Sutton.

Challenges still exist, but they pale in comparison to the obstacles that American companies with an interest in adopting greener solutions persistently face, and in provinces like Alberta, an Alberta renewable energy surge is reshaping the opportunity set.

Although cannabis is legal in a number of states, it remains illegal federally, which means access to capital and regulatory clarity south of the border can be difficult to come by.

“Right now getting a new project built is expensive to do because you can’t get traditional bank loans,” says Canndescent CEO Adrian Sedlin, speaking by phone from California.

In retrofitting the company’s farm to accommodate a sizeable solar field, he struggled to secure investors, even as a solar-powered cannabis facility in Edmonton showcased similar potential.

“We spent over a year and a half trying to get it financed,” says Sedlin. “Finding someone was the hard part.”

Decriminalizing the drug would ultimately increase the supply of capital and lower the costs for innovative designs, something Sedlin says would help incentivize producers to switch to more effective and ecologically sound techniques.

Some analysts argue that selling renewable energy in Alberta could become a major growth avenue that benefits energy-intensive industries like cannabis cultivation.

Canndescent, however, is already there.

“We’re now harnessing the sun to reduce our reliance on fossil fuels and going to sustainable, or replenishable, energy sources, while leveraging the best and most efficient water practices,” says Sedlin. “It’s the right thing to do.”

 

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Germany shuts down its last three nuclear power plants

Germany Nuclear Phase-Out ends power generation from reactors, prioritizing energy security, renewables, and emissions goals amid the Ukraine war, natural gas shortages, decommissioning plans, and climate change debates across Europe and the national power grid.

 

Key Points

Germany Nuclear Phase-Out ends reactors, shifting to renewables to balance energy security, emissions, climate goals.

✅ Three reactors closed: Emsland, Isar II, Neckarwestheim II

✅ Pivot to renewables, efficiency, and grid resilience

✅ Continued roles in fuel fabrication and decommissioning

 

Germany is no longer producing any electricity from nuclear power plants, a move widely seen as turning its back on nuclear for good.

Closures of the Emsland, Isar II, and Neckarwestheim II nuclear plants in Germany were expected. The country announced plans to phase out nuclear power in 2011. However, in the fall of 2022, with the Ukraine war constraining access to energy, especially in Europe, Germany decided to extend nuclear power operations for an additional few months to bolster supplies.

“This was a highly anticipated action. The German government extended the lifetimes of these plants for a few months but never planned beyond that,” David Victor, a professor of innovation and public policy at UC San Diego, said.

Responses to the closures ranged from aghast that Germany would shut down a clean source of energy production, especially as Europe is losing nuclear power just when it really needs energy. In contrast, the global response to anthropogenic climate change continues to be insufficient to celebratory that the country will avoid any nuclear accidents like those that have happened in other parts of the world.

A collection of esteemed scientists, including two Nobel laureates and professors from MIT and Columbia, made a last-minute plea in an open letter published on April 14 on the nuclear advocacy group’s website, RePlaneteers, to keep the reactors operating, reviving questions about a resurgence of nuclear energy in Germany today.

“Given the threat that climate change poses to life on our planet and the obvious energy crisis in which Germany and Europe find themselves due to the unavailability of Russian natural gas, we call on you to continue operating the last remaining German nuclear power plants,” the letter states.

The open letter states that the Emsland, Isar II, and Neckarwestheim II facilities provided more than 10 million German households with electricity, even as some officials argued that nuclear would do little to solve the gas issue then. That’s a quarter of the population.

“This is hugely disappointing, when a secure low carbon 24/7 source of energy such as nuclear was available and could have continued operation for another 40 years,” Henry Preston, spokesperson for the World Nuclear Association. “Germany’s nuclear industry has been world-class. All three reactors shut down at the weekend performed extremely well.”

Despite the shutdown, some segments of nuclear industrial processes will continue to operate. “Germany’s nuclear sector will continue to be first class in the wider nuclear supply chain in areas such as fuel fabrication and decommissioning,” Preston said.

While the open letter did not succeed in keeping the nuclear reactors open, it does underscore a crucial reason why nuclear power has been part of global energy conversations recently, with some arguing it is a needed option for climate policy after a generational lull in the construction of nuclear power plants: climate change.

Generating electricity with nuclear reactors does not create any greenhouse gases. And as global climate change response efforts continue to fall short of emission targets, atomic energy is getting renewed consideration, and Germany has even considered a U-turn on its phaseout amid renewed debate.

 

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Let’s make post-COVID Canada a manufacturing hub again

Canada Manufacturing Policy prioritizes affordable energy, trims carbon taxes, aligns with Buy America, and supports the resource sector, PPE and plastics supply, nearshoring, and resilient supply chains amid COVID-19, correcting costly green energy policies.

 

Key Points

A policy to boost industry with affordable energy, lower carbon taxes, resource ties, and aligned U.S. trade.

✅ Cuts energy costs and carbon tax burdens for competitiveness

✅ Rebuilds resource-sector linkages and domestic supply chains

✅ Seeks Buy America relief and clarity on plastics regulation

 

By Jocelyn Bamford

Since its inception in 2017, the Coalition of Concerned Manufacturers and Businesses has warned all levels of government that there would be catastrophic effects if policies that drove both the manufacturing and natural resources sectors out of the country were adopted.

The very origins of our coalition was in the fight for a competitive landscape in Ontario, a cornerstone of which is affordable energy and sounding the alarm that the Green Energy Policy in Ontario pushed many manufacturers out of the province.


The Green Energy Policy made electricity in Ontario four times the average North American rate. These unjust prices were largely there to subsidize the construction of expensive and inefficient wind and solar energy infrastructure, even as cleaning up Canada's grid is cited as critical to meeting climate pledges.

My company’s November hydro bill was $55,000 and $36,500 of that was the so-called global adjustment charge, the name given to these green energy costs.

Unaffordable electricity, illustrated by higher Alberta power costs in recent years, coupled with ever-more burdensome carbon taxes, have pushed Canadian manufacturing into the open arms of other countries that see the importance of affordable energy to attract business.

One can’t help but ask the question: If Canada had policies that attracted and maintained a robust manufacturing sector, would we be in the same situation with a lack of personal protective equipment and medical supplies for our front-line medical workers and our patients during this pandemic?  If our manufacturing sector wasn’t crippled by taxes and regulation, would it be more nimble and able to respond to a national emergency?

It seems that the federal government’s policies are designed to push manufacturing out, stifle our resource sector, and kill the very plastics industry that is so essential to keeping our front-line medical staff, patients, and citizens safe, even as the net-zero race accelerates federally.

As the federal government chased its obsession with a new green economy – a strange obsession given our country’s small contribution to global GHGs – including proposals for a fully renewable grid by 2030 advocated by some leaders, it has been blinded from the real threats to our country, threats that became very, very real with COVID-19.

After the pandemic has passed, the federal government must work to make Canada manufacturing and resource friendly again, recognizing that the IEA net-zero electricity report projects the need for more power. COVID-19 proves that Canada relies on a robust resource economy and manufacturing sector to survive. We need to ensure that we are prepared for future crises like the one we are facing now.

Here are five things our government can do now to meet that end:

1. End all carbon taxes immediately.

2. Create a mandate to bring manufacturing back to Canada through competitive offerings and favourable tax regimes.

3. Recognize the interconnections between the resource sector and manufacturing, including how fossil-fuel workers support the transition across supply chains. Many manufacturers supply parts and pieces to the resource sector, and they rely on affordable energy to compete globally.

4. Stop the current federal government initiative to label plastic as toxic. At a time when the government is appealing to manufacturers to re-tool and produce needed plastic products for the health care sector, labelling plastics as toxic is counterproductive.

5. Work to secure a Canadian exemption to Buy America. This crisis has clearly shown us that dependency on China is dangerous. We must forge closer ties with America and work as a trading block in order to be more self-sufficient.

These are troubling times. Many businesses will not survive.

We need to take back our manufacturing sector.  We need to take back our resource sector.

We need to understand the interconnected nature of these two important segments of our gross domestic production, and opportunities like an Alberta–B.C. grid link to strengthen reliability.
If we do not, in the next pandemic we may find ourselves not only without ventilators, masks and gowns but also without energy to operate our hospitals.

Jocelyn Bamford is a Toronto business executive and President of the Coalition of Concerned Manufacturers and Businesses of Canada

 

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The biggest problem facing the U.S. electric grid isn't demand. It's climate change

US power grid modernization addresses aging infrastructure, climate resilience, extreme weather, EV demand, and clean energy integration, using AI, transmission upgrades, and resilient substations to improve reliability, reduce outages, and enable rapid recovery.

 

Key Points

US power grid modernization strengthens infrastructure for resilience, reliability, and clean energy under rising demand.

✅ Hardening substations, lines, and transformers against extreme weather

✅ Integrating EV load, DERs, and renewables into transmission and distribution

✅ Using AI, sensors, and automation to cut outages and speed restoration

 

The power grid in the U.S. is aging and already struggling to meet current demand, with dangerous vulnerabilities documented across the system today. It faces a future with more people — people who drive more electric cars and heat homes with more electric furnaces.

Alice Hill says that's not even the biggest problem the country's electricity infrastructure faces.

"Everything that we've built, including the electric grid, assumed a stable climate," she says. "It looked to the extremes of the past — how high the seas got, how high the winds got, the heat."

Hill is an energy and environment expert at the Council on Foreign Relations. She served on the National Security Council staff during the Obama administration, where she led the effort to develop climate resilience. She says past weather extremes can no longer safely guide future electricity planning.

"It's a little like we're building the plane as we're flying because the climate is changing right now, and it's picking up speed as it changes," Hill says.

The newly passed infrastructure package dedicates billions of dollars to updating the energy grid with smarter electricity infrastructure programs that aim to modernize operations. Hill says utility companies and public planners around the country are already having to adapt. She points to the storm surge of Hurricane Sandy in 2012.

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"They thought the maximum would be 12 feet," she says. "That storm surge came in close to 14 feet. It overcame the barriers at the tip of Manhattan, and then the electric grid — a substation blew out. The city that never sleeps [was] plunged into darkness."

Hill noted that Con Edison, the utility company providing New York City with energy, responded with upgrades to its grid: It buried power lines, introduced artificial intelligence, upgraded software to detect failures. But upgrading the way humans assess risk, she says, is harder.

"What happens is that some people tend to think, well, that last storm that we just had, that'll be the worst, right?" Hill says. "No, there is a worse storm ahead. And then, probably, that will be exceeded."

In 2021, the U.S. saw electricity outages for millions of people as a result of historic winter storms in Texas, a heatwave in the Pacific Northwest and Hurricane Ida along the Gulf Coast. Climate change will only make extreme weather more likely and more intense, driving longer, more frequent outages for utilities and customers.

In the West, California's grid reliability remains under scrutiny as the state navigates an ambitious clean energy shift.

And that has forced utility companies and other entities to grapple with the question: How can we prepare for blackouts and broader system stress we've never experienced before?

A modern power station in Maryland is built for the future
In the town of Edgemere, Md., the Fitzell substation of Baltimore Gas and Electric delivers electricity to homes and businesses. The facility is only a year or so old, and Laura Wright, the director of transmission and substation engineering, says it's been built with the future in mind.

She says the four transformers on site are plenty for now. And to counter the anticipated demand of population growth and a future reliance on electric cars, she says the substation has been designed for an easy upgrade.

"They're not projecting to need that additional capacity for a while, but we designed this station to be able to take that transformer out and put in a larger one," Wright says.

Slopes were designed to insulate the substation from sea level rise. And should the substation experience something like a catastrophic flooding event or deadly tornado, there's a plan for that too.

"If we were to have a failure of a transformer," Wright says, "we can bring one of those mobile transformers into the substation, park it in the substation, connect it up in place of that transformer. And we can do that in two to three days."

The Fitzell substation is a new, modern complex. Older sites can be knocked down for weeks.

That raises the question: Can the amount of money dedicated to the power grid in the new infrastructure legislation actually make meaningful changes to the energy system across the country, where studies find more blackouts than other developed nations persist?

"The infrastructure bill, unfortunately, only scratches the surface," says Daniel Cohan, an associate professor in civil and environmental engineering at Rice University.

Though the White House says $65 billion of the infrastructure legislation is dedicated to power infrastructure, a World Resources Institute analysis noted that only $27 billion would go to the electric grid — a figure that Cohan also used.

"If you drill down into how much is there for the power grid, it's only about $27 billion or so, and mainly for research and demonstration projects and some ways to get started," he says.

Cohan, who is also author of the forthcoming book Confronting Climate Gridlock, says federal taxpayer dollars can be significant but that most of the needed investment will eventually come from the private sector — from utility companies and other businesses spending "many hundreds of billions of dollars per decade," even as grid modernization affordability remains a concern. He also says the infrastructure package "misses some opportunities" to initiate that private-sector action through mandates.

"It's better than nothing, but, you know, with such momentous challenges that we face, this isn't really up to the magnitude of that challenge," Cohan says.

Cohan argues that thinking big, and not incrementally, can pay off. He believes a complete transition from fossil fuels to clean energy by 2035 is realistic and attainable — a goal the Biden administration holds — and could lead to more than just environmental benefit.

"It also can lead to more affordable electricity, more reliable electricity, a power supply that bounces back more quickly when these extreme events come through," he says. "So we're not just doing it to be green or to protect our air and climate, but we can actually have a much better, more reliable energy supply in the future."

 

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Report: Solar ITC Extension Would Be ‘Devastating’ for US Wind Market

Solar ITC Impact on U.S. Wind frames how a 30% solar investment tax credit could undercut wind PTC economics, shift corporate procurement, and, without transmission and storage, slow onshore builds despite offshore wind momentum.

 

Key Points

It is how a solar ITC extension may curb U.S. wind growth absent PTC parity, transmission, storage, and offshore backing.

✅ ITC at 30% risks shifting corporate procurement to solar.

✅ Post-PTC wind faces grid, transmission, and curtailment headwinds.

✅ Offshore wind, storage pairing, TOU demand could offset.

 

The booming U.S. wind industry, amid a wind power surge, faces an uncertain future in the 2020s. Few factors are more important than the fate of the solar ITC.

An extension of the solar investment tax credit (ITC) at its 30 percent value would be “devastating” to the future U.S. wind market, according to a new Wood Mackenzie report.

The U.S. is on track to add a record 14.6 gigawatts of new wind capacity in 2020, despite Covid-19 impacts, and nearly 39 gigawatts during a three-year installation boom from 2019 to 2021, according to Wood Mackenzie’s 2019 North America Wind Power Outlook.

But the market’s trajectory begins to look highly uncertain from the early 2020s onward, and solar is one of the main reasons why.

Since the dawn of the modern American renewables market, the wind and solar sectors have largely been allies on the national stage, benefiting from many of the same favorable government plans and sharing big-picture goals. Until recently, wind and solar companies rarely found themselves in direct competition.

But the picture is changing as solar catches up to wind on cost and the grid penetration of renewables surges. What was once a vague alliance between the two fastest growing renewables technologies could morph into a serious rivalry.

While many project developers are now active in both sectors, including NextEra Energy Resources, Invenergy and EDF, the country’s thriving base of wind manufacturers could face tougher days ahead.

 

The ITC's inherent advantage

At this point, wind remains solar’s bigger sibling in many ways.

The U.S. has nearly 100 gigawatts of installed wind capacity today, compared to around 67 gigawatts of solar. With their substantially higher capacity factors, wind farms generated four times more power for the U.S. grid last year than utility-scale solar plants, for a combined wind-solar share of 8.2 percent, according to government figures, even as renewables are projected to reach one-fourth of U.S. electricity generation. (Distributed PV systems further add to solar’s contribution.)

But it's long been clear that wind would lose its edge at some point. The annual solar market now regularly tops wind. The cost of solar energy is falling more rapidly, and appears to have more runway for further reduction. Solar’s inherent generation pattern is more valuable in many markets, delivering power during peak-demand hours, while the wind often blows strongest at night.

 

And then there’s the matter of the solar ITC.

In 2015, both wind and solar secured historic multi-year extensions to their main federal subsidies. The extensions gave both industries the longest period of policy clarity they’ve ever enjoyed, setting in motion a tidal wave of installations set to crest over the next few years.

Even back in 2015, however, it was clear that solar got the better deal in Washington, D.C.

While the wind production tax credit (PTC) began phasing down for new projects almost immediately, solar developers were given until the end of 2019 to qualify projects for the full ITC.

And critically, while the wind PTC drops to nothing after its sunset, commercially owned solar projects will remain eligible for a 10 percent ITC forever, based on the existing legislation. Over time, that amounts to a huge advantage for solar.

In another twist, the solar industry is now openly fighting for an extension of the 30 percent ITC, while the wind industry seemingly remains cooler on the prospect of pushing for a similar prolongation — having said the current PTC extension would be the last.

 

Plenty of tailwinds, too

Wood Mackenzie's report catalogues multiple factors that could work for or against the wind market in the "uncharted" post-PTC years, many of them, including the Covid-19 crisis, beyond the industry’s direct control.

If things go well, annual installations could bounce back to near-record levels by 2027 after a mid-decade contraction, the report says. But if they go badly, installations could remain depressed at 4 gigawatts or below from 2022 through most of the coming decade, and that includes an anticipated uplift from the offshore market.

An extension of the solar ITC without additional wind support would “severely compound” the wind market’s struggle to rebound in the 2020s, the report says. The already-evident shift in corporate renewables procurement from wind to solar could intensify dramatically.

The other big challenge for wind in the 2020s is the lack of progress on transmission infrastructure that would connect potentially massive low-cost wind farms in interior states with bigger population centers. A hoped-for national infrastructure package that might address the issue has not materialized.

Even so, many in the wind business remain cautiously optimistic about the post-PTC years, with a wind jobs forecast bolstering sentiment, and developers continue to build out longer-term project pipelines.

Turbine technology continues to improve. And an extension of the solar ITC is far from assured.

Other factors that could work in wind’s favor in the years ahead include:

The nascent offshore sector, which despite lingering regulatory uncertainty at the federal level looks set to blossom into a multi-gigawatt annual market by the mid-2020s, in line with an offshore wind forecast that highlights substantial growth potential. Lobbying efforts for an offshore wind ITC extension are gearing up, offering a potential area for cooperation between wind and solar.

The potential linkage of policy support for energy storage to wind projects, building on the current linkage with solar.

Growing electric vehicle sales and a shift toward time-of-use retail electricity billing, which could boost power demand during off-peak hours when wind generation is strong.

The land-use advantages wind farms have over solar in some agricultural regions.

 

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