Wind works. That's the overarching message -- and the Twitter hashtag -- at the American Wind Energy Association's annual Windpower conference and exhibition this week in Anaheim, California.
The industry has followed through on its promises, said AWEA CEO Tom Kiernan in his opening remarks on Tuesday. Wind companies said they could reliably add more wind to the grid, and now five U.S. states are getting more than 20 percent of their electricity from wind energy year-round. At times last year, ERCOT and the Southwest Power Pool delivered more than 50 percent of their electricity from wind.
With a stable tax policy, the industry boosted employment from 88,000 jobs at the start of 2016, to 100,000 jobs at the end of the year -- growing nine times faster than the overall economy. Within that period, the number of manufacturing jobs grew from 21,000 to 25,000 at 500 factories and assembly plants around the country. And the industry could add another 8,000 manufacturing jobs during President Trump's term.
This growth has put global wind turbine sales on par with the annual revenue of the NFL, and the wind industry's success is benefiting underserved communities across the U.S., said Kiernan. Wind companies have invested $14 billion in America each year for the past two years -- with most of that in economically challenged rural areas. Over the next four years, AWEA expects the industry to catalyze another $85 billion in economic activity.
"We are big. We are reliable. We are delivering on our promises," said Kiernan. "And we're not just here to stay, we are here to grow, and grow, and grow."
But that growth is not guaranteed. While there's plenty to celebrate, the U.S. wind industry faces a host challenges -- including an unpredictable president and a looming market downturn.
"We're not planning to ask for an extension"
The federal Production Tax Credit (PTC) has played an instrumental role in growing the U.S. wind sector. But the industry has accepted that it’s time for the policy to phase out.
Tristan Grimbert, president and CEO of EDF Renewable Energy and AWEA board chairman, said the industry will not ask Congress for another extension of the PTC beyond the current sunset date in 2020.
"No, we're not planning to ask for an extension,” he said. “The bigger issue for me is having fair market rules.” The plan is to “protect legacy investments and plan for the future -- for the grid that we want to have, which will be much more agile, much more decarbonized, much more digital, and much more distributed.”
There was an acknowledgement at the conference this week that the U.S. wind industry could be in trouble if it isn’t proactive. Research firm Global Data projects the global wind turbine market will grow steadily over the next few years, reaching $81.14 billion in 2019, before contracting to $71.21 billion at the end of the decade when the PTC expires.
MAKE Consulting (now a Wood Mackenzie business), projects the U.S. wind market will see tremendous growth in new capacity additions in the near term, but that growth starts to taper off after the 2020 mark. MAKE estimates 73 percent of the U.S. wind industry’s 10-year growth will be concentrated into the next five years.
The firm noted that inaction to fill policy voids dampens the outlook and adds pressure on the industry to accelerate reductions in the levelized cost of energy of wind power.
In the spirit of taking action, AWEA's slogan for the 2017 Windpower conference is "a brand-new attitude." The brand-new attitude is "one of confidence," said Kiernan. "Our brand-new attitude is also one of knowing that wind power of today is not like wind power of 20 years ago, or even 10 years ago."
"The future of the grid is about competitive, affordable, flexible, clean power -- and that plays to our strengths," he said. "These and other facts justify the belief we are number one, and we are adding to the economic and national security strengths of America."
Kiernan acknowledged predictions of a market downturn in the 2020 timeframe, and laid out a multi-step plan to “prove our critics wrong.” The plan (detailed here) includes leveraging big data to boost productivity, cut costs and reduce downtime. It includes protecting the PTC in the near term and advocating for strong state-level policies. It includes building new transmission projects and working with the Department of Interior on regulatory reform in order to speed up the wind permitting process -- an issue that plagued the industry during President Obama’s term.
So far, though, navigating the new Trump administration hasn’t exactly been a breeze.
“Trump’s fossil fuel fetish”
Asked for one word to describe their views on the Trump administration, a panel of wind industry leaders offered up the terms "open," "interesting" and "hopeful." But there was also a sense of doubt and uncertainty at the conference that revealed itself more during coffee breaks and happy hours.
California State Senate President pro Tempore Kevin de León didn't hesitate to express his views, however. He said outright that clean energy is facing a "hostile" Congress and administration, and that California is doing everything it can to fight back.
"Trump's fossil fuel fetish is not just environmentally out of touch -- economically, it doesn't make any sense," said de León.
AWEA and other pro-renewable energy groups are taking more of a “wait and see” approach. However, these groups have expressed concern that the Department of Energy's 60-day grid reliability study will be biased against renewables, and have sought ways to weigh in on the research.
"I agree with the question that Secretary Perry has asked," said Gregory Wolf, CEO of Leeward Renewable Energy. "But I would argue that he's sort of framed it maybe a little bit one-sided, and so I think that's a fair criticism as we see it play out."
Xcel Energy CEO Ben Fowke underscored his utility's commitment to investing in wind power on Wednesday. He added: "We have successfully integrated wind energy onto our system over the years without sacrificing reliability, and we're making history in the process.”
Wind actually needs an energy system study
For Grimbert, it makes sense for the DOE to review how energy markets operate. The wind industry actually needs a review of the energy system if it’s going to be successful in the years ahead.
“The agility of the grid of the future is a tremendous opportunity for wind,” Grimbert said. “The grid can manage wind; there is no question about that anymore. The real challenge for our industry is actually to adapt to a new power condition.”
That means competing with low natural-gas prices, the risk of curtailment and negative pricing. It means using artificial intelligence to improve project output. It means coupling wind with other technologies, like solar, energystorageand fast-ramping natural gas. It’s also essential to building new transmission lines in order for wind to provide reliable power in a low-energy-price environment. And new market structures are equally as important.
“We need a more sophisticated and fair market rule for the ISO to be able to better control and manage the new generation assets, while still preserving the legacy investments,” Grimbert said. Markets also need to financially recognize the ancillary services wind can offer, as well as the capacity and low-carbon energy wind provides.
“These value streams need to be recognized and compensated for,” he said. “I know it sounds like a long-range vision of what the market structure needs to be, but this is my vision…of what I want AWEA to pave the road for.”
This is the strategy underpinning the “wind works” theme being touted at this week’s conference. While companies are busy bidding on, building and financing projects before the PTC window closes, the industry also needs to find ways to capitalize on all of the benefits wind provides going forward.
“Now is the time to embrace and channel all forms of support that can help us forge the policies and regulation that are needed for new revenue streams to continue to help wind to thrive,” Grimbert said. “A brand-new attitude is that wind works for America, for all Americans."