General Electric Company (NYSE:GE) believes there's a big future for wind power. Increasing its scale and penetration in wind is one of the benefits of its complicated Alstom purchase, which includes a joint venture with France for Alstom's European wind assets. And there's a good reason for GE to look abroad for growth, according to David Malkin, director of government affairs and policy at GE's energy group.

Big and growing

According to the U.S. Energy Information Administration, or EIA, renewable energy sources made up 13% of the power created in the United States last year. Of that 13%, hydro power made up about half, and wind about a third. Everything else, including solar, was in the single digits. And the interesting thing about these statistics is that hydro power has been a mature industry for a long time and isn't growing; wind, while an old technology, is just coming into its own.

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To put some numbers on that, wind power's contribution to the U.S. energy mix was roughly six times as large last year as it was in 2006, according to the EIA. During that same span, hydro power's contribution fell 10%. So wind is both relatively large in the renewable power space, and growing fast. In fact, GE's Malkin recently told Greentech Media, "In some parts of the country on a levelized-cost-of-energy basis, wind is at par with combined-cycle gas turbines without the PTC."

What a difference a year makes

But that's the fly in the ointment. The PTC, or production tax credit, helps support the wind industry by providing a roughly $0.02 per kilowatt hour tax credit for the production of renewable power, including wind. That doesn't seem like much money, but the impact has been huge historically.

The American Wind Energy Association (AWEA) explains that, "In 2012, it was uncertain whether the PTC would expire at the end of the year, or be extended. Companies throughout the wind industry were forced to put their development plans on hold, and manufacturers saw orders dry up." According to the AWEA, 2013 wind power installations fell 92% year over year! And that wasn't a unique case: PTC extension delays and lapses caused 76% drops in 2004 and 2002, and another more than 90% drop in 2000.

The PTC is, once again, up for renewal and, as usual, it's a contentious issue. GE's Malkin noted, "If Congress does nothing, the next year for the wind industry is going to be tough." And that's true even though he has high hopes for the industry over the long term. Those high hopes are backed by a recent Department of Energy (DOE) report that stated that the cost of wind power is at an "all time low."

In fact, according to the AWEA, technology advances have reduced the cost of wind power more than 40% during the past four years alone. GE has done a lot on the technology side to help this process, including upgrading software, and making turbine changes. Scientist Ryan Wiser, a co-author of the DOE report, noted that, "...enabled by technology advancements, wind projects have increasingly been built in lower-wind-speed areas."

Essentially, technology is extending wind's reach. So there really is a lot to like about the industry, and good reason to believe that the PTC is becoming increasingly less important. It's the on-again, off-again nature of the PTC, however, that blows everything up.

Source: ReubenGBrewer, via Wikimedia Commons.

In fact, after the last extension of the PTC, GE's turbine orders quadrupled. That should give it a good base of business during the next couple of years, according to Anne McEntee, the head of GE's renewable energy business. But new orders could fall off again if the PTC is allowed to lapse. And that's a big problem, at least in the United States. Which is exactly why GE is doing the right thing by reaching into new markets via Alstom, even though it has to share ownership of the business with France.

If the PTC doesn't get renewed, look for GE to feel a hit in its U.S. wind operations. Indeed, it could potentially be a Mike Tyson-like jab to the entire U.S. wind industry in 2015, even though the long-term future looks promising, as falling costs open up new domestic wind markets.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool owns shares of General Electric Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.