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Barriers for the wind industry include lack of transmissioninfrastructure, constrained supply of copper and steel,policy inconsistency, high cost, and additional regulatorybarriers. Turbine technology will continue to improve onlywith a supportive policy environment and incentives forresearch and development.Small wind turbine applications face challengesas well.Many of the same obstacles to large-scale wind apply tosmall wind, including cost issues and resource variability.Federal PolicyThe Production Tax Credit (PTC) has helpedgenerate a strong wind industry in the USThe primary federal policy that hassupported the wind energy industryhistorically is the Production Tax Credit (PTC), a$.021/kWh credit for wind energy. With thePTC, the federal government engages in apublic-private partnership with wind farmdevelopers, paying up to 2/3 of the capital costof new wind projects.The tax system is an effective vehicle toraise money for public use but also toincent behavior and growth.– Matt Ferguson, Principal, Reznick GroupChanges in federal policy will help winddevelopers and provide flexibility.Under the American Recovery and Reinvestment Act(ARRA), the PTC was extended through 2012, and developersmay receive an Investment Tax Credit (ITC) instead,which gives developers an up-front credit for investmentinstead of a credit after the project is completed.Cash grants make the federal incentives evenmore accessible.Another important change in the law is that developersmay elect to receive a cash grant in lieu of the ITC. Thesechanges in policy affect the market by lowering costs fordevelopers—making wind energy cost-competitive withcoal—and increasing consumer demand for wind energy.FinanceThe wind market has been heavily reliant on taxequity financing, but this model experienced adownturn in late 2008.Although the number of wind installationswas greater in 2008 than in any other year,asset transactions decreased steadily from thebeginning of 2008 through the end of the yearas a result of the capital market crash.With a supportive policy environment, marketswill rebound.The ARRA, or stimulus bill, is expected to boost markets.Also, the DOE’s loan guarantee program will be especiallypopular, and although markets will continue to slow in2009, the market will pick up again in 2010.Wind markets are still heavily reliant on federaltax credits.In coming years, the wind industry must find ways to beless reliant on tax credits, since these are set to expire atthe end of 2012.Wind Resource and EconomicsKnowing the strength and quality of a windresource can affect the economics of windprojects.Strong, consistent resources create the idealconditions for wind energy projects, becausethey allow turbines to generate the most energyper hour.Wind resource patterns are not consistent,creating wind integration costs related tovariability and uncertainty of the resource.It is important for developers to have accurate forecasts ofwind resource patterns, since wind speeds can typicallychange from year to year. Power system operators wantreliability above all else. Demand management, storage,and plug-in hybrid vehicles can help reduce uncertaintyand help with wind integration.American Council On Renewable EnergyExecutive Summary Report 64