Amid Economic Crisis, Wind Power Spins More Slowly

The industry was unsettled by news reports earlier this month that GE might pull back from wind-power financing. An official statement by GE to the Monitor seemed to rebut that. "GE has been -- and will remain -- a significant investor in renewable energy," the statement read. Yet it also affirmed that a "core issue is the industrywide difficulty of committing to new investments in a period of high uncertainty about borrowing costs."

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Through a spokesman, JP Morgan managing director John Eber said: "We definitely are still actively investing in wind and will continue to do so through the remainder of the year, as we did last year."

"It's not that Wall Street is losing faith in wind power -- Wall Street just doesn't have as much money to play with anymore," says New Energy Finance's Zindler. "We're going to see in the next six months a disruption in the way wind projects are financed."

Who will get hit, and how hard? Industry experts say the impact will be felt most by "merchant power" -- smaller, independent power developers who have been a key force behind wind's recent growth. Many have relied on selling "tax-equity investing" deals -- the term used to describe how Wall Street trades cash in return for valuable tax credits to offset profits. Profits are down, and roughly two-thirds (about $5 billion) of wind investment in the U.S. received tax-equity investment from outside investors, Zindler estimates.

Until credit markets smooth out, tax-equity investment in wind power is likely to suffer.

But despite the doom and gloom, longer-term trends continue to push wind ahead.

Some 30 states now have renewable portfolio standards (RPS) that require utilities to purchase renewable power. Regulated utilities with a strong cash flow will continue to build wind farms, observers say.

"There are still strong drivers pushing in wind's favor including the nation's push toward energy independence and reducing carbon emissions," says Keith Hays, a global wind industry analyst with Emerging Energy Research. "Both presidential campaigns are pushing hard on both of these issues."