Wind Energy: Texas Blows Hot Air

Associated Press 07:52 AM Jul, 25, 2006

DALLAS -- Long known as a top oil- and natural gas-producing state, Texas has gained new energy acclaim by becoming the nation's top producer of wind energy.

Texas capacity stands at 2,370 megawatts, enough to power 600,000 average-sized homes a year, according to a midyear report released Tuesday by the American Wind Energy Association. That puts Texas slightly ahead of California, the nation's leader since 1981. California has 2,323 megawatts of capacity.

The total U.S. capacity is 9,971 megawatts. So far this year, Texas has added 375 megawatts, or 46 percent of the total 822 megawatts brought online nationwide.

Last year, wind energy generation grew 35 percent nationwide, adding 2,431 megawatts, but that fell short of the projected 2,500. The wind association believes it can add 3,000 megawatts nationwide this year, even if that means another 2,178 megawatts by year's end.

"There are substantially more developments in the pipeline," said Randall Swisher, the association's executive director. "We are just about where we thought we would be in terms of appearing to be on course for another industry record for the year."

Texas had slowly been creeping up on California the past few years, so taking the top spot was inevitable, wind energy consultants said. A favorable business and permitting climate along with plentiful land have attracted investments from as far away as Ireland.

Mike Sloan, president of Austin-based Virtus Energy Research Associates, estimates about $2 billion will be invested in wind energy development statewide this year and about $4.5 billion nationwide.

"Wind energy is a prudent hedging vehicle," Sloan said. "So many policy leaders around the country see the importance of energy diversity and how homegrown renewables make a lot of sense."

Next, Texas wants to be home to more than just the place with the most wind energy generation capacity, said Jerry Patterson, the state's land commissioner. Patterson said he believes Texas can be an industry hub, just as it has been for oil and natural gas.

In addition to significant statewide developments, Texas has signed two agreements since last fall with developers to build offshore wind farms along the Gulf Coast.

Wind energy, however, still has a long way to go before it's considered conventional rather than an alternative. It makes up about 1 percent of the nation's electricity. To become an attractive investment, wind farm developers often rely on federal tax credits.

For the next 18 months, projects coming online receive these credits of 1.9 cents per kilowatt hour. Those incentives are good for 10 years thereafter. But there is no guarantee that any projects completed after 2007 will receive those tax credits and that discourages long-term development, energy officials said.

Energy consultant Bruce Bailey is confident some kind of subsidy will be available after 2007. Bailey, who is president of AWS Truewind LLC in Albany, New York, said federal lawmakers are becoming increasingly more bullish on this renewable energy and won't likely let it expire without an extension.