Friday, March 14 2014
American wind energy powered through 2013, which turned out to be a year characterized by industry ramp up. With many major national players announcing new hires and expanding their operations, and big names in the technology sector adding wind to power their businesses, the industry is set for an exciting and productive 2014.
The more than 60 gigawatts of total installed wind power as of 2013 made up an important part of the U.S. power supply last year, with wind actively supporting the grid both in day-to-day operations and in times of extreme stress on the power system.
A key driver to American wind energy's success is that, remarkably, it is now 43 percent cheaper than it was in 2009, making the prospect of investing in U.S. wind power an attractive one, indeed.
Indicators of a Robust Industry
While the big story for 2012 was a record number of megawatts installed (i.e., completed), 2013 ended with a bang of another kind--in the area of construction starts. At the end of 2013 there were more U.S. wind power megawatts (MW) under construction than ever in history, with over 12,000 MW of new generating capacity in the process of getting built. While wind's cost competitiveness and other industry and market-related factors certainly played a role (more on that below), another major factor involved policy, for projects that started construction in 2013 will qualify for the federal Production Tax Credit, wind energy's primary policy driver. These projects being developed and built will keep the industry busy well beyond 2014. More than 550 U.S. manufacturing facilities within the industry's supply chain will be working to meet the demand.
In another sign of the industry's strength, last year saw a record number of power purchase agreements (PPAs) signed, as utilities continued to display ever-increasing understanding of wind power's cost-competitiveness and ease of integration onto the U.S. grid. At least 60 PPAs for nearly 8,000 MW were signed by utilities and corporate purchasers, of which 5,200 MW have not yet started construction.
In 2013, as utilities inked PPAs, they regularly expressed enthusiastic support for wind energy and its benefits. ""With these long-term power purchase agreements, we're adding a significant amount of Oklahoma wind energy, bringing more diversity to our fuel mix, and doing so at a price that will provide substantial savings for our customers," said Stuart Solomon, president and CEO of AEP-Public Service Co. of Oklahoma, in a statement regarding the utility's purchase of nearly 600 MW of wind.
Other signals of the industry's strength came via news on several other fronts in 2013. Major players in the energy and tech industries showcased the power of wind as an affordable, fuel-free resource during 2013, with announcements from Facebook, Microsoft, and Google, all concerning commitments to build wind-powered datacenters.
Moreover, billionaire investor Warren Buffet's MidAmerican Energy, a Midwestern energy giant, announced its intention to invest more than
$1.9 billion into wind power in Iowa, signaling to investors that American wind power is an important and growing feature of the American energy landscape.
With major corporations and institutional investors showcasing their confidence in wind energy, it is no small wonder that U.S. wind power attracts an average of $18 billion annually.
State Leadership and Hotspots
At the state level, renewable portfolio standards (RPS) have helped drive the buildout of renewable energy projects. Twenty-nine states and the District of Columbia have established RPS programs, requiring a targeted amount of energy to come from renewable sources. The RPS is a significant driver of wind energy development in the U.S., and wind power has fulfilled 86 percent of RPS requirements through 2011. This year, numerous challenges, typically from minority interests, to already-established RPS laws were successfully rebuffed, underscoring those laws' popularity, and state governments continue to embrace renewable energy as an important way to grow their economies through new manufacturing, jobs, and private investment.
A few states stand out as role models for the country, powering past old records and setting new standards for renewable energy sources across the United States. One particular day in May 2013, Colorado set a new record by producing over 60 percent of its electricity from wind. In Texas, meanwhile, wind power is approaching 10 percent of the state's total electricity generation (9.9 percent in ERCOT, the state's primary grid operator). Iowa is producing 25 percent of its power from wind, and overall, nine states are obtaining 10 percent or more of their electricity from wind energy.
Some of the states poised for major growth in wind energy in coming years include Texas, Iowa, Kansas, North Dakota, and Michigan. On the supply-chain side, meanwhile, there are now over 5,600 MW of turbine orders placed, with major manufacturing facilities active in places such as Colorado, Kansas, Iowa and South Dakota. U.S. manufacturing production capacity has ramped up dramatically, and in fact the largest turbine order in the history of the U.S. wind industry was placed in the Fourth Quarter of 2013. The 1,050-MW order, which was placed by MidAmerican, was secured by Siemens Energy. The turbine manufacturer's Fort Madison, Iowa, facility will produce all the blades, while the nacelles and hubs will be assembled at the Siemens plant in Hutchinson, KS. (The nacelle is the box-like structure that sits atop the tower and houses the generator and most of the turbines' key components.)
Wind power is more affordable than ever, having established itself as an important part of the American energy landscape. Further extension of the PTC represents an important policy goal during the current period when comprehensive tax reform--which is seen as a means of establishing longer-term wind energy policy--continues to be discussed but remains on the sideline in Congress for the time being.
President Obama indicated in January's State of the Union address that he continues to support the tax incentive when he said, "Let's continue that progress [on clean energy] with a smarter tax policy... so that we can invest more in fuels of the future... to leave [our children] a safer, more stable world, with new sources of energy."
Moreover, the U.S. industry has many reasons for favorable long-term prospects. In addition to the record activity at the end of 2013, wind energy helped keep the lights on and insulate against temporary price spikes during the recent "polar vortex" cold weather snap, demonstrating the value of wind power as part of a balanced energy portfolio. Recent reports from Oklahoma, the Midwest and Mid-Atlantic regions have confirmed that wind energy lowers costs for electric consumers. As previously mentioned, utilities' ever-increasing understanding of wind energy's benefits bodes well for this clean, renewable resource. And, critical to some parts of the country facing continuing drought, wind energy uses no water in its production.
Of course, wind power's attributes as a clean energy source cannot be ignored. As a growing percent of the U.S. power mix today, wind energy already avoids 100 million metric tons a year of carbon dioxide emissions--equivalent to taking 17 million cars off the road. That number will rapidly grow as wind energy scales up to 20 percent of the grid and beyond - making the addition of more wind power one of the fastest, cheapest, and largest-scale ways for states to meet the Administration's new goals for reducing carbon pollution from power plants.
Credits: Photo credit for Community Wind WWF: Juhl Energy Inc.
Photo credit for PSE_CRDSC_1228 : Jennifer Diaz, Puget Sound Energy