Congress hasn't renewed the production tax credit, which provides incentives for wind farms completed before Dec. 31. Efforts to take advantage of the subsidy trumped interest in gas-fired stations, which are supported by a plunge in prices for the commodity resulting from hydraulic fracturing technology that's increased supply.
A surge of wind-farm connections in November and December could double the amount of wind capacity added this year to as much as 12 gigawatts, outpacing the additional gas turbines, according to New Energy Finance.
"It shows that wind has firmly planted its foothold as a valuable energy source," Jacob Susman, chief executive officer of New York wind developer OwnEnergy Inc., said in an interview. "Five years ago we had to drag utilities in kicking and screaming. Now they've got teams of experts who understand its value."
To qualify for the tax credit, which pays owners of wind farms 2.2 cents per kilowatt-hour of power they produce over 10 years, projects must be online and producing power by Jan. 1. Unless congress extends the incentive, wind turbine installations may fall 88 percent next year to as low as 1.5 gigawatts, New Energy Finance forecasts.
A bill to extend the wind production tax credit was passed in the Senate Finance committee in August and promoted by Senator Chuck Grassley, a Republican from Iowa who sponsored the first wind energy tax credit in 1992.
In an effort to head off opposition to an extension, the American Wind Energy Association this month proposed a six-year phase-out of the credit, ending the subsidy at the start of 2019. The Washington-based industry group says 37,000 jobs will be lost if the credit lapses now.
"The reason we're having an historic year is because the incentives are in place," said Elizabeth Salerno, chief economist at director on industry data at the AWEA. "There's more at stake now than there ever has been."
Some utilities oppose the plan, noting that the strength of installations shows wind can survive without subsidy, according to Joseph Dominguez, a senior vice president of Exelon Corp., the largest owner of nuclear plants in the U.S.
"The wind energy industry has matured and is thriving today; the PTC is no longer needed," Dominguez said in a Dec. 13 statement criticizing the credit. "Rather than a reasonable phase-out, AWEA is essentially asking for a six-year extension of the now 20-year old PTC."
An increase in natural gas prices may make wind more competitive. Gas futures have risen almost 15 percent this year, which would be their first annual increase since 2007.
Utilities in 29 states are required to get an increasing amount of their supplies from renewable resources such as wind and solar, whether or not Congress renews tax credits for wind.
General Electric Co., the largest supplier of wind turbines to the U.S., has benefited from the surge in orders, said Chief Executive Officer Jeffrey Immelt.
"We'll probably make more money this year than the rest of the industry combined in renewables," Immelt said on a Dec. 17 conference call with analysts. "We can't control how the PTC works or doesn't work, but we have a very strong competitive wind business that basically has done the job."