What's the outlook for wind power?
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August 22, 2012
What's the outlook for wind power?

  • In 2011, about $14 billion was invested to add approximately 6,800 megawatts (MW) of new wind power capacity to the U.S. grid. That is a 31 percent increase over 2010 installations and represents 32 percent of all new electric capacity addition in the United States for 2011. Total U.S. wind power capacity is now 50,000 MW, enough electricity to power 13 million homes annually, or all the homes in Nevada, Colorado, Wisconsin, Virginia, Alabama, and Connecticut combined.
  • Wind energy has increased 18-fold since 2000. Data are incomplete, but it is estimated that 3.2 percent of all U.S. energy came from wind at the end of 2011. Six states derive at least 10 percent of their energy from wind, with South Dakota leading the pack at over 22 percent.
  • The cost of wind energy projects continues to decline because of increased competitiveness among U.S. manufacturers of wind turbines and such components as towers, blades, gears, and generators. Nearly 70 percent of the equipment installed at U.S. wind farms in 2011 is now from domestic manufacturers, doubling the 2005 figure of 35 percent.
  • The wind sector employs 75,000 people in manufacturing (which accounts for 30,000 jobs), project development, construction and turbine installation, operations and maintenance, transportation and logistics, and financial, legal, and consulting services.
  • Even with all these positive developments, the wind energy sector may be in trouble for one overriding reason–the expiration of the federal production tax credit (PTC) at the end of 2012.

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DOE market report

Those observations and a great many others are contained in the Department of Energy’s (DOE) sixth annual Wind Technologies Market Report. While the DOE tends to emphasize the positive aspects of wind energy, a priority in President Obama's renewable energy strategy, the Department candidly states that the wind power industry faces "uncertain times" with the possible demise of the PTC. Along with the Advanced Energy Manufacturing Tax Credit, the PTC provides a 30 percent investment credit to manufacturers who invest in capital equipment to make components for clean energy projects in the United States. Incentives under the PTC amount to about $1.4 billion, and many Republicans in states with little wind power are seeking to end the government payout.

The wind industry projects that 37,000 jobs could be lost if the PTC expires. Wind energy companies are struggling to place projects into service by the end of 2012 to qualify for the federal aid. That may make 2012 the most productive year yet from wind projects.

Falling gas prices

But the level of investment beyond 2013 is heavily tied to the continuation of significant federal support. The DOE also notes that the wind energy providers are finding it harder to match the dropping prices of natural gas.

"Although low wholesale electricity prices are, in part, attributable to the recession-induced drop in energy demand, the ongoing development of significant shale gas deposits has also resulted in reduced expectations for gas price increases going forward," states the DOE. "While comparing wind and wholesale electricity prices in this manner is not appropriate if one’s goal is to fully account for the costs and benefits of wind energy relative to its competition, these developments may nonetheless put the near-term comparative economic position of wind energy at some risk absent further reductions in the price of wind power and absent supportive policies for wind energy."

Read DOE's report on the wind technologies market.

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