The Washington Post’s recent article on the “The rise and fall of the U.S. wind industry, in one chart” showed the correlation between the federal wind production tax credit (PTC) and annual installations of wind. When the credit is allowed to expire, installations plummet. When it is renewed, a boom period ensues. This has resulted in an uneven, “saw-tooth” pattern of wind growth that among other things generates anxiety about the future of the market. How, might you ask, does this compare to China – where wind capacity doubled for four of the last six years? Here’s one chart:
Starting in 2003 with a central bidding process, wind installations began to grow. Throughout the 11th Five-Year Plan this growth continued, through the establishment of a national feed-in-tariff for wind based on four regions in 2009, and pushing China ahead of the U.S. in cumulative capacity in 2010. Although facing power transmission difficulties, China likely overtook the U.S. in grid-connected capacity in the middle of this year. By 2015, China has set an installed capacity target of 104 GW.
Chart #2 shows the policies that led to this robust growth and eventual stabilization:
Source: Shi Jingli of ERI, December 2010 (original Chinese presentation). (RMB 1 = US 15.5 cents)
One could put this side-by-side the EIA graph and make several conclusions. The first one that comes to mind: consistency matters. By continuously improving the pricing mechanism (without lapses in support), China was able to develop a domestic wind base that is stable at around $0.08 – $0.10 / kWh. This has incidentally become a model for China’s solar feed-in-tariff launched last year (though on a more truncated timeframe).
As others have already pointed out, this does not mean the U.S. should set about establishing a FIT tomorrow. There are significant considerations as to initial scale, interconnection and tariff-setting if the U.S. wanted to take the FIT federal. Still, a more consistent signal from Congress (whether through the PTC or another mechanism) can go a long way toward building a more robust clean energy market here at home.