The US Department of Energy (DOE) recently released its 2013 Wind Technologies Market Report summarizing the accomplishments of the U.S. wind energy industry. The full report can be found here. Compared to the record-setting 13 GW of new operating wind projects in 2012, 2013 was clearly an off-year, with only a little over 1 GW of new wind energy capacity added. One of the major reasons for this dramatic fall-off was the expiration of the federal income tax production tax credit (PTC) at the end of 2012, which created a land rush of projects being placed in service at end of year 2012, depleting the project pipeline for 2013. The revival of the PTC in 2013 was too late to stimulate significant project completion in 2013. The good news is that because projects that commenced construction by the end of 2013 will qualify for the PTC, a flood of wind projects will be placed in service in 2014 and 2015. The boom and bust cycle of PTC driven wind project development continues.
Other significant highlights of the DOE report include:
• Prices for wind power continue to drop, with the national average levelized price of wind power purchase agreements reported at around $25/MWh, on a small sample. This is a far cry from the 2009 national average of nearly $70/MWh.
• Merchant off-take projects represented 25% of the new capacity in 2013, mainly in the Texas market.
• Wind turbine prices have dropped dramatically from more than $1,500/kW in 2008 to a reported range of $900/kW to $1,300/kW in 2013.
• Turbines designed for low wind speed regimes (IEC Class 2/3) have gained significant market share, with deployments in both low wind speed locations and higher wind speed locations with low turbulence.
The outlook for wind power in the near term is very good, with a significant volume of PTC qualified projects slated for completion in 2014 and 2015. This new wave of projects is being driven not only by the PTC but also by the recent improvements in the cost and performance of wind power technologies. Estimates of expected capacity additions range from 4,400 to 6,400 MW in 2014 and from 6,000 MW to 9,100 MW in 2015. The outlook for 2016 and beyond is much less certain. A DOE analysis of current state renewable portfolio standards (RPS) suggests that existing RPS programs will require average annual renewable energy additions of just 3-4 GW/year through 2025, and only a portion of this new capacity will come from wind.