Wind has continued its recovery from the depths of 2010 but continues to be dogged by the specter of a policy train wreck, courtesy of Congress, in the next year or so.

That’s not quite the way the American Wind Energy Association (AWEA) put it, but the implication was clear as the benefits of enjoying a relative eternity of policy support start to wind down. Without the lapse of tax credits or a cash grant in lieu of the credit, policies and development prospects going into next year are pretty uncertain.

“We’re seeing just how effective stable tax policy can be,” said Rob Gramlich AWEA senior vice president of policy. A three-year extension of a production tax credit winds down in 2012. Cash grants in lieu of the tax credit expire in two months.

“In that period of relative stability, we’ve been bringing in a lot of manufacturing into the country and development has been going strong,” he added.

The U.S. wind industry installed 1,204 megawatts in the third quarter, and about 3,360 megawatts on the year so far. About 2,000 megawatts began construction from July to September. There are more than 8,400 megawatts under construction, which is more than in any quarter since 2008, AWEA says.

But that acceleration for projects under construction is due to the expiring policies. Renewable energy allies in Congress are trying to extend both programs, but their fates are uncertain in the current political climate.

That will mask much of the underlying issue.

“Fourth quarters tend to be much larger than the previous three, and this year will be no different,” said Liz Salerno, director of statistics for AWEA.

Total installations for the year expected to be 6,500 megawatts to 7,500 megawatts for the year. Total capacity is at 43,461 megawatts.

Colorado was the runaway leader for the quarter, brining 500 megawatts online. Ohio, which didn’t have utility scale wind a year ago, now has more than 100 megawatts.

What the industry liked to highlight was the inroad into the South, which has been hostile territory until lately.

Alabama Power, a subsidiary of Southern Company, recently signed their first wind power purchase agreement with the Alabama Public Service Commission finding that wind was lower cost than procuring energy from its own resources.

What about 2013, a mere 15 months away?

According to AWA says policy uncertainty has many leading wind developers saying they have no projects scheduled for 2013, which is starting to threaten both development companies and the U.S. wind energy supply chain. 

Not a model to sustain a wind, or any other business.