Record Low Costs Drive Opportunities for the U.S. Wind Energy Industry
With fall comes the harvest of megawatts promised.
As would be expected by third quarter’s end, wind energy project developers are cruising into the later stages of construction on many — but hardly all — of their record number of projects. The completed megawatts are beginning to add up.
In fact, the U.S. wind industry was at its busiest ever in the third quarter while completing more of the wind projects that were under construction at the start of the quarter. The American Wind Energy Association (AWEA) reported that 419 MW went online during the third quarter, bringing the 2014 total to 1,254 MW.
But while the construction cycle continues to mature, the biggest story remains what’s still under construction — and the number of megawatts that can potentially begin construction. Some 13,600 MW across 105 projects were still being built as the fourth quarter began. The recent completion of the transmission lines developed under Texas’s Competitive Renewable Energy Zone model continues to be a huge enabler of construction. Of the 13,600 MW under construction, 7,600 MW are in Texas. Nationally, the factors helping to drive construction activity are wind energy’s record low costs and high demand from utilities for the clean, affordable energy source.
As of September 30, 46,400 wind turbines with a total generating capacity of 62,300 MW were operating in the U.S., according to AWEA’s count.
Also of note, AWEA’s third quarter numbers showed that another 3,700 MW of projects under pre-construction development have inked off-take agreements with power purchasers. Having a power contract in place, of course, is a good indication that a project will get built.
Those who have been in the wind industry for some time know that when it comes to project completion news, a given year typically starts quietly before ramping up by the third quarter and then going full steam as the year closes out. Typically, 60-70 percent of annual installations are completed in the fourth quarter. One reason for this is that during many years, developers are often pushing hard until Dec. 31 to finish projects before deadlines to qualify for the Production Tax Credit (PTC). This year’s historic under-construction figure foreshadows not just a busy holiday season, but a strong 2015 as well, when the majority of the projects started under the last extension of the PTC are expected to finish construction.
The most recent PTC extension removed the typical year-end frenzy from the equation because it required that project construction need only start, rather than be completed and online, by the end of last year for them to qualify. This PTC language tweak was badly needed in order to give the industry’s supply chain time to ramp back up in 2013 after grinding to a near halt in 2012 as a result of the threatened expiration coming at the end of that year. This time around, therefore, while the fourth quarter will be busy, don’t expect the 13,600 MW currently under construction to all be completed by New Year’s Eve.
Looking beyond 2015, a lot more construction could be on the way — that is, if there’s an appropriate policy environment in place. The U.S. Department of Energy’s Wind Vision report, in peer review since it was previewed at AWEA’s WINDPOWER 2014 Conference & Exhibition, states that wind energy capacity can double by 2020, and provide 10 percent of America’s electricity — and then double again by 2030, to 20 percent of the grid. It projects that by 2050, wind can provide as much as 35 percent of the nation’s electricity. At that point, wind would be one of the leading sources of electric generation in the nation.
The Wind Vision becomes all the more compelling when considering that the U.S. industry is on pace so far to meet the 2030 goal, as outlined in an initial report produced by the George W. Bush administration in 2008.
In order to make that vision reality, it is crucial that the PTC is extended. AWEA CEO Tom Kiernan has expressed optimism that Congress will extend the PTC and continue its success story, one that features a domestic wind industry supply chain of more than 500 factories in 43 states. AWEA is calling on industry members to contact their Members of Congress and urge them to take action on an extension.
About The Author
Carl Levesque is a clean energy communications consultant for AWEA and principal of Channel Wind Communications. He worked in AWEA’s Public Affairs Department for six years, most recently as the association’s editor and publications manager. In his role at AWEA, and as editor of AWEA’s Wind Energy Weekly industry newsletter, he wrote about and performed communications work on virtually all topics affecting the industry, which he continues to do today.