Wind energy is key to renewable electrical generation. Green energy transformation plans all feature wind energy alongside solar and hydro as a key electrical generator. The rollout of wind energy is proving difficult. Expectations for results are likely to be missed. This piece is part of series of backgrounds on why wind energy is hard.
EkaLore has previously looked at wind turbine manufacturers and the structure of the global market. The manufacturers are faced with common problems globally. Taken together these factors will make expectations hard to accomplish.
Tax incentives, credits, and preferences can be too complicated (USA), or small (EU, China, India), They are proving insufficient for manufacturing, investors, and operating enterprises.
Tax credits – an incentive used widely – are an additional problem.
In the USA, there are domestic content requirements for the full tax credits under the Inflation Reduction Act incentives for green energy transformation project:
· Iron and Steel elements must have been manufactured in the USA. (per USC Section 661.5, Title 49)
· 2023 requirements are 40% of total costs in the USA from mining, manufacturing, and related assembly production. (20% for offshore wind energy) Later years see increasing requirements.
Delays in establishing USA production for appropriate grades of steel are already seeing projects unable to earn full incentive tax credits.
On the tariff side, Chinese projects prior to 2022 benefited from a generating feed-in-tariff subsidy no longer available. With the removal of this benefit the volume of Chinese wind energy installations declined. Many global looks at green energy transformation progress didn’t observe the changes in the Chinese incentives. Likely drops in wind energy in other locales will occur when incentives are reduced.
For more analysis and notes on Alien Invaders to the global energy markets see http://www.ekalore.com
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