Wind power in the US expected to peak in 2012

The U.S. Department of Energy‘s ”2011 Wind Technologies Market Report” finds that in 2011, the United States was still one of the fastest-growing markets for wind power. Around 6.8 gigwatts (GW) of new wind power capabilities were established in 2011, up from 5.2 GW in 2010.  2011 levels, however, were still beneath the 10 GW built in 2009. With the concerns of uncertain federal policies on the way, 2012 is expected to have the wind power market reach its peak, according to the research. Put together by Lawrence Berkeley National Laboratory (Berkeley Lab), the “2011 Wind Technologies Market Report” listed some other important points: • Today, wind power accounts for over 10% of the total electricity production in six states, two of which have over 20%. Combined, these statistics comprise over 3% of the nation’s entire supply of electricity. In 2011, wind power made up 32% of all the new additions to U.S. electricity capacity. • In 2011, wind turbine manufacturers and suppliers still kept their productions domestic. Therefore, a large number of wind power projects’ equipment is from the U.S. In 2005-2006, approximately 35% of the equipment was domestic while in 2011 it rose to 67%. Yet, according to Ryan Wiser, a Staff Scientist at Berkeley Lab and co-author of the report, “behind these positive headline numbers, the domestic wind industry supply chain is currently facing severe pressure, due to uncertain prospects after 2012.” Profits have lowered, and there is a growing concern that manufacturing is producing over capacity, which could lead to major layoffs should turbine demand remain as is or further decline. • Increased turbine scaling has created a larger average for capacity factors. Since 1998-99, the average nameplate capacity of wind turbines installed in the U.S. has gone up 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 grown by 86% (to 89 meters). In some areas, however, the increase has been reduced by significant cuts in output of wind energy and wind developers building out lower wind speed sites. • Since 2008, costs of wind turbines have fallen 20 to 30%.  This decline has taken some time to appear in installed project cost data, which, on average, only began to change in 2011. Based on information from a preliminary sample of wind power projects being built in 2012, more cuts in installed project costs are likely. • The above findings are contributing to aggressive wind power pricing.  It is clear that wind power pricing rose for projects that signed power purchase agreements (PPA) in 2009 and has since been declining. Of the contracts signed in 2011, the capacity-weighted average 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,” states 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.” • Though 2012 is expected to have strong growth for wind power, 2013 may see substantial decline. With important 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) expected to end by the close of 2012, new capacity additions in 2012 may greatly pass the ones from 2011 as developers rush to commission projects. Simultaneously, the end of these incentives, along with continued low natural gas prices, low electricity demand, and current state policies that are not enough to uphold the current level of capacity additions, may significantly reduce the pace of new builds in 2013 and beyond, regardless of improvements in wind power technology. From : The Green Economy