States struggle with renewable energy investments

Investment in clean energy in 2012 has dropped to its lowest levels since 2009, according to the latest renewable energy data from Ernst & Young. Several states are struggling to get wind energy projects off the ground and it is likely that a key federal tax incentive for wind projects will expire before next election. Renewable energy projects of all types are facing headwinds, China recently alleged that five US states are violating free-trade rules with their renewables projects ratcheting up a looming trade war between the two countries. Can renewables survive?

In the private sector, more businesses are implementing energy mixing strategies in order to cut rising energy costs. However, as wind and solar projects are sometimes cost-prohibitive to build and maintain, that energy mix may not be as beneficial as originally thought.

Currently china leads the world in wind capacity additions. Data from a recent Worldwatch Climate and Energy report shows that the country has increased its wind capacity 40% since 2010. Whereas by the end of 2011, the US accounted for a mere 17% of global wind power capacity additions. Wind power itself accounts for less than 3% of total US power generation.

Right now, the growth of wind power in the US relies heavily on the federal Production Tax Credit (PTC), the tax credit finances renewables projects by reducing corporate income tax by 2.2 for every kilowatt-hour produced. This tax credit is expected to expire at the end of the year.

On Tuesday, US Senator Chuck Grassley told employees at a wind turbine plant in his district that while the tax credit may be revived in the next legislative session it is unlikely that the credit will be reauthorized before the November elections. Congressional Republicans have been unable to find a pay-for despite broad based support for the measure including support from the President, meaning that jobs in the burgeoning sector are likely to be cut nationwide.

Programs to support wind-energy projects in states like Nevada have also been a financial flop. Few of them produce enough power to be financially viable and some actually neutralize any carbon savings if power generators turn on from lack of wind in order to keep turbines moving.

The California Public Utilities Commission (CPUC) is working to begin funding more clean energy technology although the state’s deepening budget challenges may halt any forward movement.

Energy financier T. Boone Pickens, once an advocate for wind power – has shifted to advocating natural gas as a bridge fuel. At a media briefing event in Las Vegas, Nevada earlier this month, Pickens said that a move to natural gas would lessen our dependency on foreign oil while renewables work to become economical.

“You can run an 18-wheeler on natural gas,” he said.

He introduced a bill to Congress incentivize natural gas use last year, although his bill has met the same fate as the PTC. Congressional Republicans unable to find a pay-for haven’t let the measure through.

“For 40 years our country has had no energy plan, we need to put the US first,” Pickens said.