GLOBE-Net, August 31, 2012 - Facing looming
policy uncertainty beyond 2012, the U.S. remained one of the
fastest-growing wind power markets in the world in 2011-second only
to China-according to a recent report released by the U.S. Department of
Energy and prepared by Lawrence Berkeley National Laboratory (Berkeley
Lab).
Roughly 6.8 gigawatts (GW) of new wind power capacity were
connected to the U.S. grid in 2011-more than the 5.2 GW built in
2010, but below the 10 GW added in 2009. Driven by the threat of
expiring federal incentives, new wind power installations are
widely expected to be substantially higher in 2012 than in 2011,
and perhaps even in excess of 2009's record build.
Other key findings from the U.S. Department of Energy's "2011
Wind Technologies Market Report" include:
• Wind is a credible source
of new generation in the U.S. Wind power comprised 32% of
all new U.S. electric capacity additions in 2011 and represented
$14 billion in new investment. Wind power currently contributes
more than 10% of total electricity generation in six states (with
two of these states above 20%), and now provides more than 3% of
total U.S. electricity supply.
• In spite of the lack of
policy clarity, wind turbine manufacturers and their suppliers
continued to localize production domestically in 2011. As
a result, a growing percentage of the equipment used in U.S. wind
power projects is being sourced domestically: 67% in 2011, up from
just 35% back in 2005-2006. However, Ryan Wiser, a Staff Scientist
at Berkeley Lab and co-author of the report, notes, "behind these
positive headline numbers, the domestic wind industry supply chain
is currently facing severe pressure, due to uncertain prospects
after 2012." Specifically, profit margins have been declining and
concerns about manufacturing overcapacity have deepened,
potentially setting the stage for significant layoffs if demand for
turbines (for post-2012 delivery) does not pick up.
• Turbine scaling has
boosted wind project capacity factors. Since 1998-99, the
average nameplate capacity of wind turbines installed in the U.S.
has increased by 174% (to 1.97 MW in 2011), the average turbine hub
height has increased by 45% (to 81 meters), and the average rotor
diameter has increased by 86% (to 89 meters). This substantial
scaling has pushed average capacity factors among new wind projects
higher over time, though the increase has been mitigated in recent
year by significant curtailment of wind energy output in some
regions, along with a trend towards wind developers building out
lower wind speed sites.
• Falling wind turbine
prices have begun to push installed project costs lower.
Wind turbine prices have fallen 20 to 30% from their highs back in
2008, but this decline has been slow to show up in installed
project cost data, which only began to turn the corner (on average)
in 2011. Data from a preliminary sample of wind power projects
being built in 2012 suggest further reductions in installed project
costs.
• Lower wind turbine prices
and installed project costs, along with improved capacity factors,
are enabling aggressive wind power pricing. Grouping
projects according to the year in which they signed a power
purchase agreement (PPA) makes it clear that wind power pricing
peaked among those projects that executed contracts in 2009 and has
fallen substantially since. Among a sample of wind power projects
with contracts signed in 2011, the capacity-weighted average
levelized price is $35/MWh, down from $59/MWh for projects with
contracts signed in 2010, and $72/MWh for projects with contracts
signed back in 2009.
"Wind PPA prices-particularly in the central U.S.-are now
approaching previous lows set back in 2003," notes Berkeley Lab
Research Scientist and report co-author Mark Bolinger.
"But even with today's much lower wind energy prices, wind power
still struggles to compete with depressed natural gas and wholesale
power prices in many parts of the country."
• Looking ahead, projections
are for continued strong growth in 2012, followed by dramatically
lower but uncertain additions in 2013. With key federal
incentives for wind energy (including bonus depreciation and a
choice of the production tax credit, investment tax credit, or
Section 1603 Treasury cash grant) currently slated to expire at the
end of 2012, new capacity additions in 2012 are anticipated to
substantially exceed 2011 levels-and perhaps even the record high
set in 2009-as developers rush to commission projects.
At the same time, the possible expiration of these incentives at
the end of 2012, in concert with continued low natural gas prices,
modest electricity demand growth, and existing state policies that
are not sufficient to support continued capacity additions at the
levels witnessed in recent years, threatens to dramatically slow
new builds in 2013 and beyond, despite recent improvements in the
cost and performance of wind power technology.
Check here for presentation slides on the U.S.
Energy Department Market report on Wind Energy