March 2017 Vol. 72 No. 3
Editor's Log
Questions About The Future Of Wind And Solar Energy Industry
By Robert Carpenter, Editor-in-Chief
There was a vast array of blinking, red lights against a sea of darkness. The night skies of north central Oklahoma were filled with these lights, and additional fields of blinking yellow lights extended into other areas across the plains of Oklahoma. The eerie scene struck me as a radical shift from peaceful, calm countryside of years past as we drove through the rural area.
Many years of mandated transfer of power generation to alternative energy sources have driven a modern Oklahoma land run to turn farm and ranch land into massive wind tower generators. The race to install these huge structures has spread across the central plains of America and brought an economic boom. States have even created their own tax incentives, beyond the generous federal programs, as further inducement for companies to build these unique behemoths across the countryside.
The wind and solar industry has enjoyed presidential and congressional support for many years. When the program ran its course, an extension was negotiated. The lucrative breaks targeted only at wind and solar power have helped drive the broad construction of wind and solar farms.
Still, the overall alternative power production programs have not been able to approach the lofty goals established by former President Obama to replace conventional energy sources. With federal funds running short and the national debt ever-climbing, continued support for the exclusive wind/solar production tax benefits has waned. Still, at the 11th hour in 2015, enough support was rallied to extend the program again, but with specific time limitations and a phase-out of the program entirely.
The extension is aimed to allow continued growth and development of the wind and solar power markets, particularly for power generation. In theory, it will also provide time and investment options for further research and development to address major remaining shortfalls in wind and solar technology. These include long-term storage capabilities, and the ability to efficiently and effectively transfer that energy over long distances – historical challenges that have seen major progress, but still no substantive solutions that are economically feasible without special tax credits in a competitive market.
With the price of natural gas remaining cost competitive, it is hard to justify wind and solar power without financial pillars of support. Some in the alternative power industry feared that with potentially radical direction and change in our country’s political leadership, support for the wind and solar markets will evaporate.
My guess is that the current program will continue for now. President Trump, while certainly being supportive of the U.S. oil and gas industry (and of course, pipelines), has also stressed energy independence via any practical solutions including alternative energy.
However, most likely there will be no resurrection of the wind and solar tax break program once the gradual phase-down runs its course. With budget pressures and a new sense of programs being self-sufficient, once the current tax credit program phases out, there will be no stay or renewal of the program like occurred in 2015 – especially with cheap natural gas so abundant and energy efficient. As long as President Trump and a more fiscally conservative Congress remain in power, support for such programs will most likely conclude.
Many are nervous about the future of wind and solar. For Oklahoma, falling budgets have forced suspension of additional tax breaks. Apparently, margins are so precarious that, even with federal tax incentives, much of the wind farm construction in that state has ground to a quick halt.
Solar seems to have the best shot of moving forward – at least in small stages – though nothing is certain there either. The wind power market’s future is centered upon how fast and how far it can develop before the production tax credit program expires. Many questions remain as long-term political support is uncertain and solutions to technological limitations persist.
Will rural lands return to farming and ranching, or remain as blinking lights on the plains, a reminder of changing energy fortunes?
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