Prevailing headwinds

Mechanicville -- Don Carola absolutely loves his new wind turbine.

The Mechanicville resident has two wind turbines on his eight-acre property that overlooks the city -- a 2-kilowatt Southwest Skystream that he installed in 2008, and a 10-kilowatt Bergey that he got about a year ago.

When the wind blows, he's often able to generate enough electricity to supply his home's power needs, and he believes that with enough other conservation efforts, he might be able to replace his oil heating system with electric heat.

"I'm pretty ecstatic," Carola said. "It's been a good experience. Really, the ultimate goal is to be oil-free. That's where I'm trying to head."

Indeed, the market for small wind projects like those undertaken by Carola is doing well in New York state. But the market for medium- and large-scale wind projects has slowed dramatically this year, here and across the country, for a variety of reasons, including low natural gas prices and uncertainty over expiring tax breaks.

That's a particular concern in the Capital Region, which is home to General Electric Co.'s renewable energy headquarters and one of its wind farm monitoring stations in Schenectady. Other wind farm developers also have offices here.

New York officials are trying all they can to reverse that trend because the expansion of wind power here is crucial to the state's goal of getting 30 percent of its power through renewable sources by 2015.

Some new initiatives of the New York State Energy Research and Development Authority are designed to boost wind turbine construction in the state, especially midsize wind turbines as large as 600 kilowatts. Such mid-sized systems are large enough to power between 150 to 200 homes, depending on the wind.

Jeff Peterson, a program manager for NYSERDA, says that such mid-sized systems could be key to expanding the amount of wind energy capacity in New York. Currently, New York has 1,200 megawatts of wind generating capacity, although only 95 megawatts are under construction in the state, according to the American Wind Energy Association, which is lower than what wind advocates in New York would like to see.

In fact, New York's pipeline of current projects is a lot smaller than other states like Texas, Illinois, Minnesota and Colorado, according to AWEA.

Peterson said that could change now that NYSERDA is getting ready for another solicitation under the state's Renewable Portfolio Standard that subsidizes projects such as wind farms, hydro plants and biomass generators. The RPS, as it is known, is funded by a charge on utility bills.

"The expectation is that a new solicitation will be out very soon," Peterson said. "It will be interesting to see."

Another reason for the slowdown in wind development in New York and elsewhere is the fact that natural gas prices have remained at levels that make wind farms, which have no fuel costs, less economically desirable right now than they have been in the past. Natural gas is a major fuel for traditional power plants in New York state.

"The challenge in the natural gas world is the low price of natural gas," Peterson said.

The national numbers don't lie. After a stellar 2009 in which 10,000 megawatts of new generating capacity were installed in the U.S., installation has dropped off greatly. There were only 539 megawatts of installation in the first quarter of the year, the lowest first-quarter total since 2007. AWEA attributes this to low electric prices and low demand for power and the lack of a long-term federal renewable energy policy to give the industry confidence.

NYSERDA has a number of new programs to also fund small- and medium-sized wind projects. Since 2008, NYSERDA has funded 61 small-scale wind projects, typically for homeowners and farmers, with funding totaling $1.8 million.

For instance, Carola, the Mechanicville homeowner, says NYSERDA and federal incentives helped to reduce the net cost of his Bergey system by two-thirds. His monthly payment on the loan is about $350.

"The only way that this works is with the government helping," Carola said.

Now NYSERDA is planning to offer $16.6 million over the next five years, money that is expected to greatly increase small and medium projects.

Peterson said the hope is that turbines up to 600 kilowatts will be constructed -- which should help the state reach its renewable energy goals more quickly.

"We're hoping we start getting the larger installations," Peterson said. "We hope to get more energy from the larger systems."

Still, there are national issues that are causing uncertainty in the wind power markets, including a 30 percent federal investment tax credit that expires at the end of the year.

AWEA predicts that tens of thousands of wind industry workers could lose their jobs if the tax break is not extended.

"We have people being laid off right now and we expect to see more without fast action," AWEA Chief Executive Officer Denise Bode said in a statement.

Of course there is concern at GE with the drop of the U.S. market, although company executives believe the company's global footprint offsets that weakness.

GE spokeswoman Chris Horne said there is a need for "strong federal policy" for the U.S. to compete with Europe and China for wind technology leadership.

"Despite the landscape, GE remains a global leader and has the leadership position in the U.S. where nearly one out of every two wind turbines is a GE wind turbine," Horne said, "Our Schenectady operations are global and vibrant.

In a recent conference call with analysts, GE CEO Jeff Immelt echoed that sentiment.

"A lot of that is going to come globally," Immelt said. "You know, like Canada, Brazil, Turkey places like that, you know, I think are where a lot of the demand is going to be."