New Legislation Could Cause Investments in Wind Energy to Climb

There is one less hurdle blocking investment into wind farm development. The Obama administration on Dec. 6 decided that qualifying wind farm operators won't be penalized for killing or harming bald and golden eagles caught up in wind turbines for the next three decades.

Wind turbines can weigh hundreds of tons, and numerous birds -- including but not limited to eagles -- have had the misfortune of flying directly into the blades. The public-policy move is an attempt to support the proliferation of renewable energy even as government subsidies are set to expire.

Wind farm developers seeking protection from any penalties must obtain a permit, which comes under review every five years, and keep a tally of the number of eagles harmed or killed by the massive turbines. If that number exceeds estimates, wind farm operators must take further steps to make their operations safer.  

Duke Energy  (NYSE: DUK  ) subsidiary Duke Energy Renewables on Nov. 22 agreed to pay a fine of $1 million for the deaths of 14 golden eagles and more than 100 other birds at a pair of its Wyoming wind farm site. Duke was the first company to be prosecuted for the turbine-related eagle deaths and was done so under the Migratory Bird Treaty Act of 1918.

Now that the threat of penalty has essentially been lifted, investors might find they have more of an incentive to finance the development of wind farm power generation. The timing coincides with a change in renewable energy subsidies scheduled to expire at year-end. 

Waning subsidies
The latest development in renewable energy couldn't have come at a better time for the wind farm industry, with the tax credit, worth an estimated $12 billion for the coming decade, threatening to expire on Dec. 31. If you think that subsidies aren't necessary for growth in this market, think again.

And with the prosecution of Duke Energy still close in the rear view mirror combined with the uncertainty surrounding the government incentives and persistently low natural-gas prices, a rather dark cloud was threatening wind power.

The industry is already grappling with items it can exhibit some control over, such as the timing and manner in which power storage for renewable sources (so that energy can still be harnessed even when the sun's not shining and the wind's not blowing) will come to the forefront so that wind farms can operate at a higher capacity.

The hovering threat of fines for unintentionally killing birds with blades that can be hundreds of feet long and turn up to 55 miles per hour only exacerbated these conditions.    

Major players
For all of its challenges, wind power generation has been growing at a rather steady clip. In 2012, for instance, wind power overtook other sources as the top provider of new power generation in the U.S. commanding $25 billion in investments, according to the U.S. Department of Energy. 

Google  (NASDAQ: GOOGL  ) has been one of the companies at the forefront of this phenomenon and has poured more than $1 billion into renewable energy projects across wind and solar. In September, the company revealed it would purchase all of the output, or 240 MW, from a wind farm facility in Texas. Google will acquire the power from Chermac Energy starting in 2014 when the facility comes online.

Google is on a quest to generate electricity at its data centers completely with renewable power. The power it purchases from the Chermac plant, dubbed the Happy Hereford wind farm, will be fed into a local grid that powers the company's Oklahoma data center.

Google isn't alone, either, with companies ranging from  Kroger to Apple to Wal-Mart similarly taking steps to increase their reliance on renewable power.

Conclusion
The lifting of the ban on penalties isn't really a win for anybody in light of the eagle's fate, and with this allowance comes great responsibility on the part of wind farm developers. If nothing else, it softens the blow of the ongoing threat of expiring tax credits, and this hail-Mary pass by the government could usher in another wave of investments that might otherwise have gone elsewhere.

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  • Report this Comment On December 10, 2013, at 9:06 AM, Yoshimaroko wrote:

    "Renewable". Didn't we ban DDT back in the '70s to protect thgese birds? Apparently they are more "renewable", now?

    I wonder how many birds-per-kilowatt this dubious "renewable" path is costing?

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