A funny thing happened on the way to Solyndra becoming the dominant clean energy issue of the 2012 presidential campaign: It got blown away.

The talk now is all about wind power. What a stunning turn of events. The Obama campaign ought to send a thank-you note to the Romney campaign, in appreciation for their ham-handed decision to come out against the production tax for wind -- in wind-friendly Iowa of all places.

You know the White House loves having wind power in the spotlight by the simple fact that President Obama, in Iowa himself on Tuesday, seemingly couldn’t go five minutes without mentioning wind power and the PTC. He even stopped by a wind farm. (And this was one day after the Republican veep pick, Rep. Paul Ryan (R-Wis.), utterly avoided the issue in a speech at the Iowa State fair.)

Obama’s biggest applause line? It came when he mocked Mitt Romney for saying “You can’t drive a car with a windmill on it.”

“I don’t know if he’s actually tried that -- I know he’s had other things on his car,” Obama said, referring to how the Romney family famously drove 12 hours on a vacation with Seamus, the clan’s Irish setter, in a carrier strapped to the roof of their Chevy station wagon.

Obama told the crowd that if Romney “wants to learn something about wind, all he’s got to do is pay attention to what you’ve been doing here in Iowa.”

Romney could do that -- or he could read the report [PDF] released Tuesday by the U.S. Department of Energy and the government’s Berkeley Lab. It said that wind power in the United States is becoming cheaper and more efficient, and providing a boost to the U.S. manufacturing sector as more and more of the equipment used in wind farms is sourced domestically.

Oh, and wind was responsible for nearly one-third of the new electrical capacity that came onto the grid last year.

Iowa Wind Farm Map

But the report also noted the flip side of wind in America right now: expiration of key tax credits -- as we’ve reported extensively -- along with “continued low natural gas prices, modest electricity demand growth, and existing state policies […] are not sufficient to support continued capacity additions at the levels witnessed in recent years.”

Taken in full, the report paints a picture of an industry peering over a very steep precipice, even as it notches some remarkable achievements.

Taller and bigger turbines have led to a steady increase in performance. With a few dips thrown in here and there, capacity factor has grown.

More good news: Eight of the ten wind turbine manufacturers with the largest share of the U.S. market had at least one factory in the United States at the end of 2011, helping drive up the percentage of domestically sourced equipment used in U.S. projects from 35 percent in 2005 to 67 percent in 2011.

The equipment is also becoming less expensive -- 20 percent to 30 percent less expensive than in 2008, the report said -- a trend that’s beginning to nudge down project costs, with cheaper wind power the result.

“Among a sample of wind power projects with contracts signed in 2011, the capacity-weighted average levelized price is $35 per megawatt-hour, down from $59 per megawatt-hour for projects with contracts signed in 2010, and $72 per megawatt-hour for projects with contracts signed back in 2009,” Berkeley Lab said in a statement that accompanied the report’s release.

This is where the 'but' comes in.

“But even with today’s much lower wind energy prices, wind power still struggles to compete with depressed natural gas and wholesale power prices in many parts of the country,” Berkeley Lab research scientist and report co-author Mark Bolinger said in a statement.

While the report notes that direct comparison of the price of wind and the wholesale price of electricity “is not appropriate if one’s goal is to fully account for the costs and benefits of wind energy relative to its competition,” the real-world truth is that “absent further reductions in the price of wind power and absent supportive policies for wind energy,” wind will wither.

That could make the U.S. goal of producing 20 percent of its total electricity from wind by 2030 difficult to attain. More immediately, with a number of incentives -- the production tax credit, and the 30 percent investment tax credit, and the 30 percent cash grant and bonus depreciation all set to expire -- wind is set up for a fall. The report suggested it could be a really big fall, too, with the industry already facing excess capacity in its turbine factories.

“The growth in U.S. wind turbine manufacturing capability and the drop in wind power plant installations since 2009 led to an estimated overcapacity of U.S. turbine nacelle assembly capability of more than 5 gigawatts in 2011, in comparison to 4 gigawatts of undercapacity in 2009,” the report says.

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Editor's note: This article is reposted in its original form from EarthTechling. Author credit goes to Pete Danko.

Tags: berkeley lab, doe, iowa, obama, ptc, romney, wind