With the phase-out of the Production Tax Credit (PTC) approaching, trends in the North American wind market have been primarily focused around one objective: cutting costs and driving down the price of wind energy. This is according to the inaugural North American Power List, the latest – and first U.S.-focused – report published by industry intelligence service A Word About Wind and supported by Lincoln Clean Energy. The report ranks the major influencers in the U.S. wind-energy sector and offers in-depth interviews with leading investors, utilities, and developers in the space.
With 55 of the top 100 most influential players in North American wind working for either utilities or developers, the ranking reflects a shifting dynamic in which these groups are gaining increased traction in the U.S. market. This development can be traced back to the regulatory environment fostered by the Trump administration. With the abolition of the Clean Power Plan, new import tariffs on steel and aluminium, and the impending 2020 phase-out of the PTC, the market is working towards self-sufficiency, the report states. In order to drive down costs, involved parties – from utilities to corporates – are seeking to ‘cut out the middle man.’
For example, some regulated utilities – many of which are major European players looking to enter the U.S. market – are eschewing power-purchase agreements (PPAs) in favor of building and owning their own wind farms. One such example is German energy company Innogy, which bought EverPower’s 2-GW onshore wind development pipeline in late 2017.
Other utilities and large institutions are looking to grow their own development platforms, which is reflected in an increase in consolidation agreements, such as Engie’s purchase of Infinity Renewables in February of this year.
Meanwhile, corporate institutions have begun to sign PPAs directly with wind farm owners rather than going through a third-party intermediary, an additional indicator of the market focus on cost-cutting, according to the report.
Given the current regulatory environment, A Word About Wind predicts that the prevalence of utilities and developers in the market – and the emphasis on ‘do-it-yourself’ wind energy – is only set to increase.
“While well-established in some areas, the U.S. wind industry is going through a significant period of change, particularly with developments such as the introduction of offshore wind,” said Richard Heap, editor, A Word About Wind. “Coping with this, in an uncertain regulatory environment, requires the ability to negotiate projects within tight margins – for which reason we’re seeing a lot of companies seeking to cut any ‘unnecessary’ costs, and become more self-sufficient. This trend is likely to continue as we approach 2020 and life after the PTC.”
The report features Ray Wood from Bank of America Merrill Lynch on its cover. Wood is another major player who highlights the prevalence of corporate M&As and consolidation in the market, citing the ability to “draw up good risk-adjusted returns and deal with the capital-intensive nature of development” as a key driver of recent developer buy-outs, the report states.
Wood’s market perspectives are accompanied in the report by additional in-depth interviews with sector experts. Greengate’s Dan Balaban discusses Canada’s green hotspot, Alberta, while Beth Waters from MUFG explores tax changes and new energy buyers. Additional insight is provided by Declan Flanagan from Lincoln Clean Energy, who talks about the trend toward developer buy-outs among institutional investors and utilities, while Enel’s Rafael Gonzalez offers his thoughts on securing corporate deals, expansion plans, and key trends in O&M.
The North American Power List is the latest in a series of reports by A Word About Wind and was launched at Financing Wind New York on May 30. This is the inaugural U.S. conference from the intelligence service, marking the introduction of the long-standing and popular U.K. conference format to a North American audience. For more information about this event, visit http://www.awordaboutwind.com/events/.
The report is published exclusively for A Word about Wind’s rapidly expanding international membership of energy developers, financiers, and investors. For further information and to obtain a copy, click here.