DOE Releases State of the Wind Power Market

The U.S. Department of Energy recently released the “Wind Technologies Market Report” of last year. Prepared by the Lawrence Berkeley National Laboratory, one of the key findings was that after being the fastest-growing wind power market for the past four years, the U.S. fell second to China. China accounted for 36% of the increase in the worldwide market, the U.S. 26%. Nevertheless, the U.S. market continued to expand in 2009, breaking its previous record for new wind power additions. The nation installed 10 GW of new capacity just last year — a $21 billion investment — and cumulative wind power grew by 40%.

Another significant finding is that more materials used for building wind power projects are now manufactured domestically. The report states that imports of wind turbines and select components in 2009 are estimated at $4.2 billion, down from $5.4 billion in 2008. Nine of the ten wind turbine manufacturers with the largest share of the U.S. market either have one or more manufacturing facilities operating in the United States, or have announced plans to open domestic facilities in the future.

The report also overviews developments in the wind power market. For instance, global financial crisis and lower wholesale electricity prices have affected growth prospects of the wind power industry for the worse, even while new federal policies encourage industry expansion.

Furthermore, the report analyzes trends in wind power capacity growth, industry, and manufacturing. Berkeley Laboratory authors also looked at turbine size and prices, what it costs to install projects, project performance, and wind power prices verses the price of conventional generation. Trends among developers, project owners, and wind power purchasers, are also discussed along with financing issues. The report even summarizes factors impacting the domestic wind power market such as grid integration, transmission issues, and policy drivers.

Finally, the report offers a glimpse of possible near-term market developments. A combination of the financial crisis, lower wholesale electricity prices, and lower demand for renewable energy lead many to expect 2010 to be a slower year. Industry analysts project U.S. wind power capacity installations to range from 5,500 to 8,000 MW in 2010, a drop of 20 to 45% compared to the nearly 10,000 MW installed in 2009. After a slower 2010, most predictions show market resurgence in 2011 and 2012, as programs funded by the American Recovery and Reinvestment Act mature and as financing constraints ease. However, beyond 2012 the future of wind power is considerably less predictable because of the scheduled expiration of a number of federal policies. Wind is growing, but it’s unclear for how long and how much due to clean energy uncertainties in the U.S.

Other findings from the report include:

• Growth is distributed across the country. Texas led the U.S. with 2,292 MW of new wind power capacity, but 28 states also constructed new wind power plants in 2009. Wind power provides more than 10% of in-state electricity generation in four states: Iowa (20%), South Dakota (13%), North Dakota (12%), and Minnesota (11%).
• Wind power project costs continued to increase, but reductions may be on the way. The average cost of installed wind power projects in 2009 averaged $2,120 per kW, up by 9% over the previous 2008 figure. Some expect that costs will drop soon as past cost pressures ease and work their way through to average installed costs.
• Wind project performance has improved over time, but dropped off in 2009. Taller towers and larger rotors have partially driven longer-term improvement in project performance.  An overall poor wind resource year in many parts of the country along with increasing amounts of wind power curtailment are also to blame for the drop in 2009—particularly in Texas, where 17% of all potential wind energy generation was curtailed in 2009 because of transmission inadequacy.
• Rising wind power prices and falling wholesale prices make the near-term economics of wind energy more of a challenge. Wind power prices rose again last year. The average 2009 sales price from projects built in 2009 was about $61 per MWh. -(www.poweronline.com)