WASHINGTON, Jan. 17 (UPI) — Despite a short-term spike in the cost of wind power, data from a recent Emerging Energy Research study shows wind energy is nearly cost-competitive.

The Comparative Costs of Energy report focuses on the European market but can be applied to the U.S. market as well, said William Ambrose, president of EER. Much of the study was based on global trends in the industry, he said.

“A great increase in demand has outstripped supply and growth in demand in the U.S. market has largely led to rise in costs; straining existing suppliers and component manufacturers,” Ambrose said.

One reason the United States is slightly behind Europe is the lack of consistent, long-term legislation, including the erratic production tax credit system. More recently, a lull in investment due to the demand surge and supply deficit slowed the U.S. wind industry.

“I think having a consistent regulatory framework is more important than a production tax credit per say, but I think that while wind power has become more competitive, it still doesn’t compete with, for example, power from traditional coal generation plants that already exist,” Ambrose said. “If there’s no cost associated with restricting emissions from those coal plants then that’s hard to compete with for any technology.”

EER used a scenario for the European market that encompassed the risks associated with energy security, high fuel costs and climate change as well as a $40 carbon penalty for carbon dioxide emissions. Under those conditions in Europe, EER found that wind power would lead the renewable generation technologies as one that is competitive with coal combustion, natural gas, nuclear and integrated gasification combined cycle coal technology.

Wind would not be able to carry the demand alone, but the cost of building a new wind facility would be more cost efficient than building a new traditional fossil fuel generation plant. New nuclear plants would also be competitive as a source of alternative energy as part of a mixed portfolio of supply.

“Wind is looking pretty good in the long term because there is no fuel variability, there’s no fuel cost to worry about. That’s why a lot these utilities say even though the cost may be a little bit more than some of the alternatives right now, its still worth having in our portfolio because it’s steady,” Ambrose said. “I like to think of it as a fixed mortgage versus a variably mortgage rate.”

Some say having subsidies and incentives such as production tax credits are detrimental to consumers and businesses in the long run. Tom Tanton, vice president of Institute for Energy Research and former policy adviser for the California Energy Commission, said unequal subsidies distort the market.

“If we implement a plan to phase out subsidies, the technology can mature,” Tanton said.

New legislation in the pipelines would possibly put a cap on emissions and issue a mandated timeline for reducing emissions. Other proposed regulations include increased and extended subsidies and higher taxes for oil and natural gas companies.

Other countries that have implemented stricter emissions regulations, Tanton said, like those that signed the Kyoto Protocol, have had increased emissions while the U.S. greenhouse gas intensity has been lowered over the last several years without a federal mandate.

Based on efficiency, Tanton said, wind and ethanol facilities receive 10 times more subsidies than oil and gas facilities because they are not as productive. Getting rid of subsidies will lower prices and weed out the inefficient producers.

Stephen Pociask, chief economist for the American Consumer Institute, suggested the proposed legislation would increase costs to consumers, making sources of wind energy, less cost effective.

“Energy proposals are out of sync with other proposals that increase consumer welfare,” Pociask said.

Tanton said that solutions to problems like storing nuclear waste and more stable, reliable peak wind energy will come along as the technology develops further. In the meantime, development of domestic resources, like offshore drilling and clean coal, will reduce dependence on imports and be positive for the overall economy and new technology investments.

Mandates for percentages of renewable generation would further drive up demand, which in turn could drive the price of components and manufacturing higher, creating a larger supply shortage, especially in the wind sector.

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