Citing the need to displace the use of fossil fuels in order to reduce carbon dioxide emissions, reduce energy costs and strengthen energy security while promoting economic development, 22 states and Washington, D.C., have enacted legislation called Renewable Portfolio Standards (RPS). This requires increasing the percentage of energy consumption from renewable sources, including wind, solar, biomass and geothermal. The standards currently in place can support more than 55,000 megawatts (MW) of new capacity by 2020. Nine states have introduced RPS bills, and several states are considering increasing their RPS requirements.

Last December, the Production Tax Credit (PTC) for renewable energy development was extended through
December 31, 2008. The tax credit would apply to projects that reach commercial start-up before the deadline. It is the second time that the U.S. Congress has approved an extension before it expired, allowing the industry to continue moving forward at a record pace. The PTC provides a 1.9 cent-per-kilowatt-hour (kWh) tax credit for electricity generated over the first 10 years of a project's operation.

With the RPS and PTC incentives in place, spending for new generation from renewables is expected to surpass newly built natural gas generation for the third year in a row. More than 5,000 MW of renewable energy started construction in 2007.

More than 82,000 MW of active renewable energy projects are being developed for construction kickoff between 2008 and 2012. Of these, about 27,500 MW are expected to move forward with about 87 percent expected to come from wind energy. Advancements in wind turbine technologies over the years have made wind power one of the most economic renewable energy resources to develop. With the PTC extension in place, wind energy, when placed in good wind resource areas, can be competitive with conventional fossil resources, making wind one of the most attractive renewable energy resources for investment capital. Developers and manufacturers are pushing forward, driving spending in 2007 and 2008 at a record pace. Some 66 projects are in the advanced development stages, totaling 6,917 MW of new capacity. These projects account for more than $13 billion in investments in 22 states. Commercial start-ups are expected between now and December 2008. Additional delays might occur, bringing the total below the expected 8,812 MW by the end of 2008. But the actual capacity will nevertheless represent a significant increase over the past two years' total of 4,873 MW.

Turbine availability and rising costs have been major topics of concern and will remain so for a while. The market for this year is sold out, and most of the turbines that are coming off the assembly line in 2008 have already been purchased. These shortages are leading to new manufacturing plants in the
U.S. by Spain's Gamesa and homegrown Clipper Windpower. Siemens Power Generation has opened a manufacturing site for wind-turbine blades in Fort Madison, Iowa. TECO-Westinghouse, a supplier of motors and generators, and Composite Technology Corporation, a manufacturer of aluminum cables, plan to open a plant in Round Rock, Texas, to manufacture electric equipment. Suzlon Rotor Corporation has started up a plant to manufacture nose cones of blades in Pipestone, Minnesota. Vestas plans to build a blade manufacturing plant in Windsor, Colorado, in early 2008. Acciona Windpower will open a new production plant in Iowa by the end of the year. Alstom has entered the wind turbine market with the acquisition of Spanish wind turbine company Ecotecnia, joining GE, which purchased Enron Wind, and Siemens, which purchased Bonus Energy (p. 20).

The top three general contractors, which are constructing more than 80 percent of the wind farms underway, are M. A. Mortenson (41 percent; www.mortenson.com), D. H. Blattner & Sons (24 percent; www.dhblattner.com) and RES American Construction (15.2 percent; www.res-ltd.com). The top five wind power developers of the 5,200 MW under construction own about 49 percent of the total.

For more analysis of the Power Industry, check out Industrial Info's recently released 2008 Power Industry Outlook

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