Is Surging US Wind Power Headed off a Cliff?

on January 28, 2015 at 2:54 PM

Report Claims 20 Percent Of US's Energy Could Come From Wind Power

The U.S. wind power industry said on Wednesday that it had a solid 2014, with 2,500 turbines capable of producing 4,850 megawatts put into operation, a big jump from 2013’s piddling gain of 1,098 MW. Plus, as the year drew to a close, nearly 100 projects totaling 12,700 MW were under construction. Pretty picture, right?

Maybe not.

“We worry about the industry going off the cliff again if we don’t get the Production Tax Credit extended as soon as possible,” said Tom Kiernan, who heads up the American Wind Energy Association.

U.S. wind walks an interesting line on the PTC, trumpeting that costs have plunged and made wind extraordinarily competitive, yet insisting that it needs the tax break to continue to grow. The glue that holds together that seemingly incoherent position is certainty – or lack thereof. The short-term nature of the PTC habitually leaves developers reacting to its coming and going, creating steep ramp-ups when it is in effect and, yes, cliffs when it expires.

As it did at the end of 2014.

awea graphic

Source: AWEA

So it was that industry representatives participating in Wednesday’s data dump – Jim Murphy from Invenergy and Jonathan Weisgall of Berkshire Hathaway Energy – said their companies were proceeding “cautiously” on any new projects in this thus-far PTC-less 2015.

“It’s that sentiment that concerns the industry,” Kiernan said. “It’s why we need an extension as long as possible and as soon as possible.”

The PTC, worth 2.3 cents per kilowatt-hour of energy produced in the first 10 years of a wind turbine’s operation, was first enacted in 1992 and became a big driver for wind growth in in the 2000s, when state policies such as renewable portfolio standards began to align with the federal incentive. The most recent versions of the PTC have made projects “under construction” before the law’s expiration eligible.

AWEA couldn’t say exactly how much of the capacity that it calls under construction has qualified for the PTC under complicated (though not especially onerous) IRS guidelines. Still, industry analysts see continued growth this year, at least, thanks to the robust pipeline – in December, Navigant’s Bruce Hamilton told Breaking Energy he expects perhaps 6 MW of wind to be built this year.

Many of the turbines that do begin to spin in 2015 will be in Texas, which strengthened its hold on the top rung of U.S. wind power in 2014, adding 1,807 MW to drive its total capacity to 14,094 – a figure that would rank it sixth in the world as a country, behind only China, the U.S., Germany, Spain and India. The Texas grid operator ERCOT said last week that 10.6 percent of its energy came from wind in 2014.

Don’t be surprised to see that figure grow in 2015: 60 percent of the wind capacity now under construction in the U.S. is in Texas, AWEA said.

Stepping back from the state level, the U.S. now has 65,875 MW of installed wind capacity. World leader China is at 96 gigawatts (96,000 MW), according to Bloomberg New Energy Finance, after installing some 20.7 GW in 2014. China has struggled to turn its capacity into energy on the grid, however, and in his State of the Union address last week, President Obama repeated AWEA’s claim that the U.S. leads the world in actual wind energy produced.