The financial crisis has hit the wind power industry hard as credit has dried up. Will government spending provide the needed stimulus?The green energy sector has a lot riding on 2009. Policymakers from Washington to Beijing have pledged billions of dollars in "cleantech" investment to jump-start the depressed global economy and create millions of new low-carbon jobs. Wind power is losing steam. That should be a boon to the wind power industry, which is working to harness the world's second-largest source of renewable energy after hydroelectric. As with the solar industry, wind power has been hit by a sudden slowdown in private sector investment as credit has dried up and the price of oil has fallen from its mid-2008 high. The industry hopes public spending will help fill the gap until the global economy gets back on its feet. The multibillion-dollar stimulus packages are particularly important for Europe, which remains the largest wind energy market worldwide and is home to six of the world's top 10 wind turbine manufacturers. Despite the Continent's dominant position, companies ranging from Denmark's Vestas, the global leader in turbines, to Spain's Iberdrola, the world's largest developer of wind farms, have been forced to cut back to meet the new economic realities.
The green energy sector has a lot riding on 2009. Policymakers from Washington to Beijing have pledged billions of dollars in "cleantech" investment to jump-start the depressed global economy and create millions of new low-carbon jobs.
Wind power is losing steam. That should be a boon to the wind power industry, which is working to harness the world's second-largest source of renewable energy after hydroelectric. As with the solar industry, wind power has been hit by a sudden slowdown in private sector investment as credit has dried up and the price of oil has fallen from its mid-2008 high. The industry hopes public spending will help fill the gap until the global economy gets back on its feet.
The multibillion-dollar stimulus packages are particularly important for Europe, which remains the largest wind energy market worldwide and is home to six of the world's top 10 wind turbine manufacturers. Despite the Continent's dominant position, companies ranging from Denmark's Vestas, the global leader in turbines, to Spain's Iberdrola, the world's largest developer of wind farms, have been forced to cut back to meet the new economic realities.
That means that companies with ready projects rushed to have them built before the end of 2008, and those who could not make that deadline waited until th PTC were reinstated to get re-started, which means, even if there hadn't been a financial crisis, that very little would have been built in the US in the first half of 2009.
The PTC is the production tax credit: it's a tax credit of 2c/kWh payable to renewable energy producers for 10 years if the project is built in the period of application; the law on PTC extends the period of application by one year or two each year; each time these extentions took place too late for projects of the following year to be launched in time, construction collapsed
With the US building something like 6-7,000MW of wind in 2008, a collapse from that is not easy on the industry...
Financial difficulties are going to make the restart harder in the US, that's true. In the long run, we're all dead. John Maynard Keynes
The question then becomes whether a downturn or slower growth in '09 is caused by the meltdown drying up funding or not. The PTC is there in full force, it's only a question of whether there's equity and debt available.
In other words, i see the meltdown as having a far greater effect on '09 (though only potentially) than the PTC. More importantly the meltdown affects project finance globally, where the PTC only affects the (large) US sector. "Life shrinks or expands in proportion to one's courage." - Anaïs Nin
2008 is a great year for US wind; 2009 will be a very bad year, and would have been even without the financial crisis. In the long run, we're all dead. John Maynard Keynes
IF 2009 is a down year for US wind, or as you say a "very bad year," wouldn't that be strictly attributed to financial conditions, with very little to do with the PTC.
Don't forget that the PTC can now be directly taken by utilities, no small matter, and there is movement in congress to allow other incentives.
Have your discussions with colleagues shown that the PTC is affecting 2009? I thought most experienced banks were looking forward to financing 2009 projects, with 25 -50 basis points higher fees?
of course, if the US went to a feed-in tariff, that would be too sensible. "Life shrinks or expands in proportion to one's courage." - Anaïs Nin
