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U.S. wind power drops off despite falling prices

The installed megawatt capacity of wind turbines in the U.S. dropped by almost 50 percent last year as some developers held off investing because of policy uncertainty, according to wind power trade group AWEA.

The American Wind Energy Association reported a substantial fall in U.S. wind power installations in 2010, saying some project developers held off from investing because of uncertain federal policies.

The trade association said that 5,115 megawatts of wind power capacity were put online last year, compared to 10,000 megawatts of capacity in 2009. The 2010 number also falls below annual installations for 2008 and 2007, according to AWEA data. (Click for PDF of report.)

General Electric

At the same time, AWEA reported that the price for electricity from wind has fallen. Recent power purchase agreements to buy energy from wind farms have been in the range of 5 cents to 6 cents per kilowatt-hour, AWEA director of industry data and analysis Elizabeth Salerno said in a statement. That price, which includes the tax credit project developers receive, puts it below the price of electricity generated by natural gas in some parts of the country, according to AWEA.

Energy project developers receive a 30 percent tax credit for investing in wind farms, but the existing credit was set to expire at the end of 2010. The uncertainty over whether that investment tax credit would be renewed caused "a dampening effect on investment all the way around," said Peter Kelley, the vice president of public affairs at AWEA.

The lame duck Congress in mid-December passed an extension to the tax credit until the end of 2011. With that in place, AWEA says that utilities are locking in today's rates to purchase wind power, with 5,600 megawatts now under construction.

With the direction on national wind policy unclear, state-level policies, such as utility mandates for renewable energy, are becoming more important. Texas is by far the biggest wind power state, with 10,085 megawatts of capacity installed compared to 3,675 megawatts for Iowa and 3,177 megawatts in California.

The total U.S. wind capacity is now 40,180 megawatts, which is 15 percent higher than the start of 2010. Last year, China surpassed the U.S. for the most installed capacity which grew an estimated 62 percent last year to 41,800 megawatts.