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Taking Advantage of America’s Wind Resources Providing Infrastructure and Implementing Predictable, Long-Term Incentives Ross Beppler Wise Presentation 7/25/12 What’s the Challenge? •Any way you look at it (yearly gross, per capita, historical) the United States emits large quantities of carbon dioxide • 315,000 million metric tons of carbon dioxide have been emitted since 1900 The Impact of the Power Sector • The Power Sector has a huge impact on the carbon dioxide emissions in this country • Nearly 70% of power generation comes from fossil fuels • 92% of coal is used for electricity • Wind can be used as a means of power generation Why Wind? • • • • • Part of a diverse portfolio Abundant Low Levelized Cost of Energy (LCOE) Minimal land impact Domestically produced: over 500 US manufacturers produce parts for turbines • Demonstrated Success: 90% reduction in cost since 1980, 35% of new generation the last 5 years How Does Wind Work? • Not a New Concept: 5000 B.C. first harnessing of wind energy 200 B.C. first windmill 1890 first electricity production WWII first U.S. use • Capacity Factor- Ratio of Maximum Potential Output to Actual Power Generation • Wind Classes Energy Policy in the United States • 1970 oil embargos begins federal investment in wind energy • 1978 Energy Tax Act establishes first federal tax incentive • 1992 Original Production Tax Credit set at 1.5 cents per kilowatt-hour • The Production Tax Credit has been the primary government incentive • PTC will expire in 2013 Does Wind Receive an Unfair Advantage from the Government? • Not so fast! • Long History of Government Subsidies for Energy Production • Federal Subsidies for Fossil Fuels are part of the permanent Tax Code • Research and Development funding is skewed in favor of fossil fuels What Other Obstacles Does Wind Face? • Variability • Lower Capacity Factors than other forms of generation needs back up generation • Leveling of costs • Kills birds and bats • Results in Shadowing and Noise • Transmission Infrastructure What do we do? Policy Alternatives • Something Production Tax Credit Extension • Extend the Production Tax Credit Pros Cons Demonstrated Success Not Technology Neutral Political Support Costs the Gov’t Money Industry Backing Long-term Sustainability? Impact Renewable Portfolio Standards • Requires electricity producers to provide a certain percentage of their generation from renewable sources • Primarily a state incentive thus far • Success of state programs has garnered attention for a national model • Bingaman, Markey, and Waxman sponsored bills with different priorities Cap & Trade • Sets a limit to the emissions allowed before a penalty is imposed • Creates a market for Renewable Energy Credits which can be traded allowing market forces to set the price • Potential complications with offsets Recommendation: Carbon Tax • • • • • • • • Technology Neutral Solution Existing infrastructure to put in place Not as prone to corruption Continuing incentive to reduce emissions Applicable to all power generation Could be applied to gasoline consumption Allow states to continue setting RPS Revenue Generation could pay for necessary grid Improvements Acknowledgements • For help with the paper the author would like to recognize: • Erica Wissolik, IEEE-USA, and everyone involved in the WISE program who made this opportunity possible Bill Behn, Factuly Member in Residence The IEEE Energy Policy Committee for allowing access to their meetings and correspondence Charlton Clark at the Department of Energy for providing an inside look at the DOE’s Wind Program, and giving valuable information and contacts Former WISE interns for their advice, specifically Levi Lyons for his guidance on transmission issues John Buydos at the Library of Congress for providing assistance navigating the vast resources of the library, and selecting some initial resources To the many others in D.C. and beyond who were consulted as a part of this process and aided in the completion of this report To the author’s parents for their moral support and editing help • • • • • • •