Yesterday, the U.S. Senate failed to get the 60 votes needed to extend the tax credits for wind power that are the key catalyst for wind-energy development. The bill can be brought up again before the tax credits expire at year’s end, and Sen. Harry Reid is working toward that end.

Each year that the Production Tax Credit lapsed (2000, 2002, 2004), new wind energy investment dropped considerably from the prior year: drops of 93 percent, 73 percent, and 77 percent, respectively. Even more drastic were the drops in wind-energy investment in Texas, the nation’s leader in installed wind-power capacity: In 2000, only one MW of wind capacity was added, and in 2002 and 2004, zero MW.

There is no doubt that wind developers are nervous. The American Wind Energy Association writes that:

If Congress does not act soon to extend the PTC, companies will stop making investments in projects not expected to be completed before the end of the year. . . . Since investment decisions are being made today for new wind power projects that are not expected to be completed until next year, wind energy companies are already reporting a decrease in investment as a result of the uncertainty surrounding tax policy. If Congress does not act soon to extend the PTC, companies will stop making investments in projects not expected to be completed before the end of the year.

Keep an eye on how this plays out. Without a federal subsidy of 2 cents/kWh, don’t expect 2009 to be another banner year for wind energy.