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US Wind Sector Booms, Driving Prices Down

US Wind Sector Booms, Driving Prices Down

Aside from the threat of losing a major federal tax incentive, 2012 was a great year for the U.S. wind industry.

Wind energy installations soared to 13.1 gigawatts (a 90 percent increase over 2011) and average long-term wind power prices fell to their lowest point since 2005, according to a new report by the Department of Energy (DOE).

The record amount of installed capacity not only made wind power the leading source of new U.S. electric-generating capacity in 2012, it also allowed the U.S. to narrowly overtake China as the global leader in capacity additions for the year (regaining the title it had lost in 2009). Though, as the table below shows, the U.S. still lags behind China in cumulative wind capacity.

Wind Capacity

Related article: Airborne Wind Turbines Continue to Advance

Due in part to the increased deployment of wind power, average levelized prices for wind power purchase agreements (PPA) have fallen about 43 percent since 2009 — going from a high of nearly $70 per megawatt hour (MWh) in 2009 to around $40 per MWh in 2012. According to the report:

This level approaches previous lows set back in the 2000–2005 period, which is notable given that installed project costs have not returned to 2000–2005 levels and that wind projects increasingly have been sited in lower-quality wind resource areas. Clearly, turbine scaling has more than overcome these headwinds to drive PPA prices lower. PPA prices are generally lowest in the Interior region, highest in the West, and in the middle ground elsewhere.

The chart above shows nationwide and regional average PPA prices since 1996.
The chart above shows nationwide and regional average PPA prices since 1996.

Related article: Bidders Line up for First US Offshore Wind Auction

In addition to lower wind power prices, the report shows that while the U.S. remained a large importer of wind power equipment in 2012, the wind industry managed to significantly decrease the percentage of wind equipment imports used in wind power projects. By increasing the percentage of equipment sourced domestically, the wind industry is also giving a boost to domestic manufacturing.

Specifically, DOE’s analysis found that “focusing on selected trade categories, and when presented as a fraction of total equipment-related wind turbine costs, the overall import fraction is estimated to have declined considerably, from 75% in 2006–2007 to 28% in 2012.”

The DOE report also mentions state and federal policies and their role in the continued growth of the wind industry. State renewable portfolio standards (RPS) that mandate certain levels of renewable energy have been integral in wind energy deployment, but those policies will not be enough at their current levels. DOE points out that the percentage of wind power capacity in RPS states was 83 percent in 2012 and those states are only expected to add an average of 3-5 gigawatts of renewable energy per year between 2013 and 2020.

Federal incentives have had a significant impact on deployment as well. Extended in January 2013, the federal production tax credit (PTC) allows developers of wind projects that begin construction before the end of 2013 to take a 30 percent tax credit and is expected to help boost installations through the end of the year and into 2014. But without long-term policies that can help drive continued wind energy investment, the future for the wind industry is uncertain.

By. Mari Hernandez




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Leave a comment
  • sl on August 09 2013 said:
    "Federal incentives have had a significant impact on deployment as well. Extended in January 2013, the federal production tax credit (PTC) allows developers of wind projects that begin construction before the end of 2013 to take a 30 percent tax credit and is expected to help boost installations through the end of the year and into 2014. But without long-term policies that can help drive continued wind energy investment, the future for the wind industry is uncertain."

    Bottom line: Without "free" federal money, the industry is not self sustainable.
  • Mark Goldes on August 09 2013 said:
    An engine that needs no fuel has been invented.

    It appears scalable to replace wind farms.

    Prototypes are en-route. See the AESOP Institute website.

    If it performs as expected, this is Nobel Prize quality science.

    And large units could be located at transmission lines.

    No noise or bird kill problems.
  • SA Kiteman on August 10 2013 said:
    SL:
    Well, they pretty much need the purchase mandates too or no-one would buy that unreliable cr@p either, no matter how cheap it SEEMS to be. Its expense may be "low" but its VALUE is even lower.
  • Jonathan Schonheim on August 11 2013 said:
    Wind is crap energy. Unreliable, unpredictable, too expensive unless gifted with ruinous government subsidies. Big money developers with political ties to government officials are the only ones who profit.

    Cost of wind subsidy per kwh produced is through the roof -- not comparable to the miniscule "subsidies" for more reliable forms of energy and power.

    It's all politics, pal. America has 20,000 dead wind turbines in wind farm graveyards, soon to be in the hundreds of thousands.

    What a waste of resources on an already proven loser.
  • David Lewison on August 15 2013 said:
    Wind Energy is the greatest thing since sliced bread , the price is coming down, we do not need the subsidies anymore , the technology continues to grow and Wind Farms are the futre !!! Go GE!!!!
  • Keyto Clearskies on August 21 2013 said:
    "For over 20 years Mark Goldes [the Perpetual Scam Machine] has claimed his company MPI has been developing machines that generate energy for free. In over 20 years his company has not presented one shred of evidence that they can build such machines...

    "For the past five years Mark Goldes has been promising generators "next year". He has never delivered. Like 'Alice in Wonderland' there will always be jam tomorrow, but never jam today."

    - Penny Gruber 12/06/2008

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