Under the Bush administration, there was talk, talk, talk about developing offshore wind energy, but nothing happened.
Now, several months into President Obama’s term, offshore wind is the Technology that Will Save the World — at least if you take some politicians at their word.
During a recent hearing of the House Subcommittee on Energy and the Environment, held on the 20th anniversary of the Exxon Valdez spill (the spill happened March 24, 1989), Democratic congressmen were falling all over themselves to praise “the enormous potential” of the ocean winds.
Republicans — not so much.
Ohio’s John Boehner, the Republican minority leader, said that transporting oil by barge might continue to be a problem “if you have a lot of windmills they might collide with.”
Alaska Republican Rep. Don Young made a cameo appearance, during which he warned young mothers that if they continued their anti-oil tantrums, they would no longer have “Pampers” available to them.
“Think about that!” the famous congressman warned triumphantly.
Anyway, Court Jester Young continued, there’s no point getting all upset about oil spills. After all, “the biggest polluter we have is Mother Nature.”
But enough of the comic attractions of Washington.
There was also serious talk at the committee meeting.
Massachusetts Energy Secretary Ian Bowles warned his Washington audience that if the United States didn’t get moving soon on offshore wind, “we will be regretting it for years to come.”
In other testimony to the committee, Thomas Kitsos, one-time head of the Interior Department’s Minerals Management Service, suggested that an Ocean Investment Fund be created. Money for the fund would come from lease fees paid to the federal government by the oil and gas industry, as well as by future offshore-wind developments and other renewable technology that might be commercially developed.
Money from the fund, Kitsos said, could be used to help protect the nation’s shorelines and saltwater, which, most scientists agree, are deteriorating at a frightening rate.
Congress apparently intends to back up its Brave New Promises.
The recently passed stimulus bill includes a provision for funding wind projects that harkens back to the early days of wind energy.
When the technology was first being developed, the federal government awarded the industry an investment tax credit. This credit inspired lots of activity — but not necessarily lots of power production. Some of the early investment money was well-used, and some was not.
To correct this problem, in the 1990s, Congress passed legislation that gave wind-energy developments a production tax credit, which allowed write-offs of just under 2 cents a kilowatt-hour for power actually produced.
This cleaned up the problem of bogus investments, but encouraged a different kind of investor — corporations in need of tax write-off to help the bottom line.
Last fall, when the market dropped with plummeting oil prices, so did investment interest from those same corporations. The wind industry suddenly found itself flailing desperately for funds.
The new stimulus legislation lets investors choose. Investors may now opt for a production tax credit, an investment tax credit, or, in some cases, cash in hand, once the project becomes operational.
An analysis by the Lawrence Livermore National Laboratory suggests that which option investors choose may depend on the projected capacity factor for the overall life of the project. The greater the expected power production, the better the payback if the production tax credit is chosen.
This will certainly help the wind industry during the current economic emergency, but an unexpected consequence of this could be that some projects with marginal wind speeds may end up being financed. The situation will certainly bear watching.
Wendy Williams
