Wind Energy Industry in the US and Canada: A Note on the Regulatory Environment

Regulatory environment plays a vital role in nurturing the wind energy sector. The US government initiated the advanced energy initiative (Refer to box item for a note on the Advanced Energy Initiative in the US) for funding development of cleaner, cheaper, and more reliable alternative energy sources. Renewable portfolio standards in the US mandate an increase in the supply of power from various renewable sources of energy. Policies such as the production tax credit in the US and wind power production incentives in Canada increase the attractiveness of the wind energy sector as an investment option. Incentive systems such as feed-in tariffs for suppliers of green power and net metering for power consumers encourage decentralized investments in wind power generation.

Incentive systems will continue to play a vital role in increasing wind power generation capacity in both the US and Canada until the cost of generating wind power becomes competitive with respect to conventional power. The production tax credit policy in the United States expires in December 2007. Analysts opine that if the production tax credit is not extended before it expires it may ultimately lead to an increase in the cost of wind power. However, if the production tax credit policy is extended well before it expires, wind energy capacity additions are projected to result in a significant growth in the North American wind energy market...