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U.S. wind market will peak at 14.6 GW in 2020 as PTC expires

By WPED Staff | September 12, 2019

The U.S. wind market will add 14.6 GW of capacity in 2020, according to Wood Mackenzie’s latest North America wind power outlook. The record-setting mark underlines the strength of the 23-GW pipeline Wood Mackenzie has identified as currently under construction or contracted for commercial operation in 2020.

The phase out of the Production Tax Credit (PTC) beginning in 2021 has developers rushing to complete projects in 2020, driving major bottlenecks in both logistics and interconnection queues. As a result, project delays are mounting, negatively impacting the amount and timing of wind capacity installations.

Anthony Logan, the lead author of the report, said, “Although the PTC phase-out schedule has been in place since 2015, offtakers were slow to act on procuring new capacity, yielding relatively subdued installation totals in 2017 and 2018.”

Logan, a senior analyst at Wood Mackenzie, added that deals with virtually every offtaker type have increased dramatically in the last six to 12 months.

“The lack of available logistical resources will begin to cause schedule rearrangements and delays that will grow more apparent during the first and second quarters of 2020,” he said.

Wood Mackenzie’s forecast assumes 6.6 GW of projects scheduled for 2020 will not reach completion by the end of this year but will connect to the grid in 2021.

The report estimates that roughly 1.5 GW of additional capacity will be cancelled outright – typically ahead of project construction – with any attached offtakers likely choosing solar PV resources for subsequent PPAs to replace the lost generation.

Solar PV, which benefits from the 30% solar Investment Tax Credit (ITC), is beginning to compete more effectively with onshore wind on cost.

Logan said that in the coming years solar will maintain a marginal advantage over wind due to a 10% ITC offered to solar PV in perpetuity after the wind PTC phases out.

A recent solar industry push to lobby for a 30% ITC extension would compound the impact of this and would be devastating for post-2021 wind demand, Logan added.

In the near term, he said while wind will remain competitive in key states through 2021, the negative cost impact associated with the PTC declining to 60% and then 40% of its original value will outpace cost of electricity reductions in 2022 and 2023.

Wood Mackenzie forecasts the U.S. to add 12.3 GW of wind power in 2021, before bottoming out at 5.9 GW in 2024.

News item from WoodMac


Filed Under: News

 

About The Author

WPED Staff

Comments

  1. Alice Didelot says

    October 29, 2019 at 1:49 pm

    Hi,
    Could you please share the official / governmental source explaining the sentence: “The phase out of the Production Tax Credit (PTC) beginning in 2021”. For now, I have only found official documents for a shutdown at the end of 2019.

    Thanks a lot,
    Best regards,

    • Kelly Pickerel says

      October 29, 2019 at 3:50 pm

      Once a project has locked in the PTC at a given level, its developer has four full calendar years to build it — meaning the last wind farms benefiting from the full PTC of 2016 must come online by the end of 2020.

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