The rise and fall of wind power in America

Back in the 1990s, wind turbines were a rare sight in the United States — and sprawling wind farms even rarer.

The wind boom may soon be coming to an end — or at least slowing down

Things changed considerably in the years since. Thanks to a series of tax credits from Congress and renewable-energy mandates from the states, wind power expanded at a torrid pace. Last year, wind turbines produced 4.1 percent of America's electricity. Some states do even better — Iowa and South Dakota get a quarter of their electricity from wind.

But the US wind boom is likely to start slowing sharply in the near future. Wind power still relies on government support — particularly the federal production tax credit, which can reduce the cost of building a turbine by one-third. And, in the past few years, Congress keeps letting that tax credit expire intermittently, leading to booms and busts in wind construction.

That pattern continued this year. Lawmakers let the tax credit lapse for most of 2014, until finally extending it on December 16 for the last two weeks of the year. After that, it will expire again — and no one knows if it will get renewed. If so, wind construction could taper off significantly in the years ahead (though it won't disappear entirely).

Below are six key charts looking at the rise — and possible coming fall — of US wind power:

1) Wind power has grown since 1998, mainly due to subsidies

(2013 Wind Technologies Market Report)

The chart above, from a Department of Energy report on the wind industry, shows how much capacity has been built in the United States each year since 1998. There are ups and downs over time — mainly due to policy changes.

Whenever policymakers offer tax subsidies, wind power grows fairly quickly

In the 1990s, Congress created a production tax credit that would subsidize wind producers (it was worth 2.3 cents per kilowatt hour in 2014). The idea was to help subsidize an energy source that was cleaner than fossil fuels, but still more expensive. Yet this credit wasn't permanent — and Congress occasionally let it expire (before renewing it again). That's why, in the early 2000s, you see regular ups and downs in wind additions.

Around 2004, things changed. Congress stopped letting the tax credit lapse constantly. And dozens of states began enacting mandates that required electric utilities to get a certain portion of their power from renewable energy. The result? Wind power boomed, especially as technology improved and costs fell. (There was a dip during the financial crisis as investment dried up, though Congress counteracted this in the 2009 stimulus by temporarily converting tax credits to direct grants.)

2) But growth has been much more erratic since 2012

(Energy Information Administration)

By 2012, however, things got bumpy again. The federal tax credit was set to expire at the end of the year, and no one knew if it would get renewed. Republicans had taken over the House and many conservatives were deeply skeptical about continuing to subsidize the wind industry. (A one-year extension would cost $12.1 billion over 10 years.)

Congress renewed the tax credit for just two weeks in 2014

So wind companies rushed to complete all their planned projects by the end of 2012 —before the tax credit expired. Congress then let the credit lapse at year's end. A few days later, though, lawmakers renewed the credit, albeit with a twist — anyone who started building a wind farm in 2013 could qualify, even if the project took a few years to complete. So the wind industry started a new round of projects that would be built by 2014 and 2015.

That new credit expired at the start of 2014, and it seemed like it would die for good. But in the recent lame-duck session, Congress extended the tax credit again for the last two weeks of 2014. So wind companies get another (brief) chance to plan some new wind farms that will get built a few years down the road.

Matthew DaPrato, an energy analyst at IHS Energy, estimates that this year's last-minute extension could lead to another 4 gigawatts of wind capacity (since wind farms take awhile to build, these will largely come online in 2016). But after that? It's unclear. If the credit isn't ever renewed again, he says, the US is likely to see a "significant drop" in future years — though wind won't disappear entirely.

3) 80% of US wind power now comes from just 12 states

(2013 Wind Technologies Market Report)

In 2013, wind power produced 4.1 percent of the nation's electricity (134 million megawatt-hours). But roughly 80 percent of that came from just 12 states.

Texas produces one-quarter of US wind energy

Texas is the biggest wind producer by far — producing about one-quarter of the nation's wind energy. Iowa is next, followed by California, Oklahoma, Illinois, Kansas, Minnesota, Oregon, Colorado, Washington, North Dakota, and Wyoming.

Why do these states dominate? Partly because there's a lot of wind in the Great Plains. (See here for a wind map of the United States.) And part of it is because some states (like Texas and Iowa) have strong state mandates for wind power. Meanwhile, the Southeast stands out on this map — not as much wind, and few state-level incentives for renewable power.

4) The US is #2 worldwide in wind power, but other nations are gaining

(2013 Wind Technologies Market Report)

By the end of 2013, the United States had 61 gigawatts of wind capacity — second only to China (right column). But other countries have been gaining, especially after US construction tapered off recently. Germany, for instance, built three times as much wind power as the United States did in 2013.

5) The cost of wind power is coming down

(2013 Wind Technologies Market Report)

It's getting cheaper and cheaper each year to generate electricity from wind power. One big reason for that? Wind turbines are getting bigger, with longer rotors that allow them to capture more wind over time.

(One interesting side note here: Despite these gains, the average "capacity factor" of wind turbines in the United States — that is, how often they're actually producing power — has remained flat since 2005. That's because the improved efficiency has allowed companies to build more turbines in relatively less windy areas: say, to be closer to transmission lines or get more favorable prices.)

6) The US is on pace to get 20% of its power from wind by 2030 — but that may not happen

(2013 Wind Technologies Market Report)

If the US wants to do its part to help tackle global warming, it may have to expand wind power, a source of carbon-free energy, even more drastically. Back in 2008, the National Renewable Energy Laboratory put out a study showing how the US could get 20 percent of its electricity from wind by 2030. (After that, it becomes harder to scale wind up because the turbines don't run at all hours — energy storage becomes critical.)

How likely is that? In the chart above, the blue columns show how much wind would have to be built each year to meet this target. The yellow columns show what has been built. (The green dots show various projections for 2014, 2015, and 2016 — lots of uncertainty there.)

Even if the tax credit goes, wind power won't disappear entirely

So far, the US is on pace. But what happens next? The Department of Energy report notes that a lot is uncertain right now. If Congress lets the production tax credit expire for good, then wind could see a significant drop in the years ahead. That's especially true so long as it faces competition from cheap natural gas — and as long as US electricity demand stays stagnant.

But wind power won't disappear entirely. Prices for wind projects are coming down so aggressively that it's starting to compete with conventional power sources in some areas. (That will be especially true if natural gas prices start rising in the future.) What's more, as electric utilities shut down some of their existing coal-fired power plants in response to various air-pollution rules, they may turn to cleaner energy sources. Like wind.

Further reading

-- How to stop global warming, in 7 steps. Most analyses assume that wind will have to play a huge role here.

-- Back in 2012, the Brookings Institution and the Breakthrough Institute released a paper arguing that it would be far better to gradually phase the wind tax credit out over a few years — so that wind power gets to the point where it can stand on its own without subsidies. That, they say, would be preferable to the current model of unpredictably letting the credit expire and then get renewed. The paper is titled "Beyond Boom and Bust."

"The goal shouldn't be to simply subsidize industries endlessly," is how report co-author Jesse Jenkins explained it to me at the time. "It should be to improve innovation so that the subsidies can phase out over time." That means investing in more R&D and rewarding technological improvements.

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