Compared to the sharp growth in 2007 and 2008, U.S. wind-power development in 2009 has been severely impacted by the current economic climate, according to Emerging Energy Research, Cambridge, Mass. U.S. wind players must readjust their strategies in the wake of this new competitive environment, it says. The firm’s recent reports says the U.S. wind-power industry finished 2008 at a record pace with 8,546 MW of added wind plants, led by Texas, Iowa, New York, Kansas, and Wyoming. Although EER forecasts a sharp decline in 2009, it also sees a rebound in 2010 and growth of 12 GW per year on average from 2010 to 2020. The total could supply nearly 14% of total U.S. power.
EER says its study, U.S. Wind Power Markets and Strategies, 2009–2020, provides, strategic and tactical support for those seeking to stay competitive in these challenging economic times. A few of trends addressed in the study include:
• Financial crisis stalls the near-term U.S. wind project construction schedule. A lack of sufficient project debt and tax-equity financing is pushing back a substantial portion of the wind activity originally planned for 2009. While utility-backed wind projects remain largely on track, newer entrants that rely on third-party debt are scrambling to secure the necessary capital to keep their build schedules intact. Market consolidation is expected with M&A opportunities for companies with strong balance sheets and tax equity appetites.
• Many new policies. The federal stimulus package and looming national renewable portfolio standards (RPS) will drive U.S. wind growth. The recent passage of the U.S. stimulus bill and its incentives for wind power, combined with continued growth in state RPS mandates, are laying a foundation for a strong recovery in the U.S. wind market once financial liquidity returns. Prospects of a federal RPS by 2010 and U.S. federal greenhouse gas legislation by 2012 will add to medium-term momentum.
• Longer-term U.S. wind development potential will be dictated by transmission policy. An inadequate and aging transmission infrastructure (the grid) hampers delivery of wind power from resource-rich regions to population centers with growing clean-energy demand. Most large scale, wind-related transmission projects are not scheduled for completion until after 2015. The extent to which U.S. inter-state transmission infrastructure is upgraded in the next decade – where the Obama administration sees a strong federal role will determine the pace of U.S. wind growth in the mid-to-long term.
•Confidence in the long-term stability of U.S. policy support has led to dozens of announcements of new U.S. manufacturing facilities for wind turbines and their components. “While the economic downturn has delayed some projects, recent commitments nearing $1 billion alone from leading European turbine OEMs such as Vestas, Siemens, and Nordex, provide a strong indicator of the U.S. wind market’s long-term prospects,” says EER Senior Analyst Matthew Kaplan.
•U.S. regulated utilities have extend their commitment to wind power ownership. In regions of the U.S. where regulated utilities are allowed to build and own new generation assets — primarily the Midwest, Southwest, and Pacific Northwest — utility rate-based wind ownership activity has continued to proliferate and diversify. In many of these regions, utilities are undertaking long-term plans to build, own, and operate wind assets, often with project development partners.
Under EER’s best-case scenario, U.S. annual wind power growth will increase from 8.5 GW installed in 2008 to nearly 15.5 GW added by 2020. “The U.S. wind market faces serious challenges in the short-term in terms of liquidity and credit, but the market will recover and longer-term market fundamentals remain strong,” says Kaplan.
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