AWEA annual report focuses on new construction rather than installation decline

Source: Elizabeth Harball, E&E reporter • Posted: Monday, April 14, 2014

While federal regulatory uncertainty took a predictable toll on the U.S. wind industry in 2013, the American Wind Energy Association’s (AWEA) annual report takes a rosy view of the year ahead, pointing out the record number of new wind farms in the pipeline at the close of 2013, rather than facility closures and job losses.
According to the report, released yesterday, more than 12,000 megawatts of new wind capacity was under construction by last December with an additional 5,200 MW on the way thanks to a record 60 power purchase agreements signed last year.Much of the new growth is taking place in America’s heartland. Texas, the Plains and the Midwest can look forward to many more megawatts of wind power in the coming years with more than 94 percent of projects under construction at the end of December concentrated in that region.Wind energy now makes up 4.1 percent of the total U.S. power mix with over 46,000 turbines producing 60,000 MW of electricity.”The U.S. wind energy industry is once again humming,” Tom Kiernan, AWEA CEO, said in a letter introducing the report.

2013 a ‘bust’ year for jobs, installations

But the late extension of the wind production tax credit in January 2013 did leave a mark; AWEA reported that the industry saw a 92 percent drop in installations in 2013. Last year wind saw only $2 billion in investments toward projects built, as opposed to the $15 billion average over the past five years.

As a result, two major wind-related manufacturing facilities closed. More significantly, 30,200 jobs were lost over the course of last year, more than a third of the industry’s total 2012 workforce of 80,700.

While a whopping 13,131 MW of wind was constructed in 2012 as developers scrambled to qualify for the 2.3-cents-per-kilowatt-hour production tax credit (PTC) before its expiration, in 2013, developers installed only 1,087 MW.

Such a large drop in new installations is not unprecedented — similar declines of up to 96 percent were seen in 2000, 2002 and 2004, years that also followed a lapse in the PTC. According to the report, policy uncertainty surrounding the tax credit recurs every 20 months on average, resulting in the much-decried “boom and bust cycle.”

The tax credit’s current status is looking positive for the wind industry, however — after an initial omission, Sen. Ron Wyden (D-Ore.) added the PTC to the “tax extender” bill during a Senate Finance Committee markup (GreenWire, April 3).

Elizabeth Salerno, AWEA’s vice president for industry data and analysis, stressed that an extension of the PTC is essential for investors to make the long-term financial decisions needed to keep the industry growing.

“We need some clarity; there needs to be an extension that gets done very quickly in order to not lose that momentum,” Salerno said. “We’ve seen this so many times, we know exactly what happens.”

Texas has a ‘wind rush’

The report touted the industry’s rising role in the central United States’ power portfolio, noting that more than 25 percent of electricity produced in Iowa and South Dakota in 2013 came from wind.

Between 2011 and 2013, the technology also represented more than 80 percent of all new electricity capacity in the Upper Midwest — which includes Iowa, Minnesota, South Dakota and North Dakota.

Michigan and Nebraska ranked as the industry’s fastest-growing states, both with more than 15 percent growth in wind capacity last year. California took the prize for the state with the most wind power capacity added in 2013 at 269 MW, followed by Kansas at 254 MW, Michigan at 175 MW and Texas at 141 MW.

Texas is undergoing a “wind rush,” the report states, with turbines there generating enough power for 3.3 million homes in 2013 and more than 7,000 MW of new capacity in the works by the end of 2013. Texas is also the nation’s top wind industry employer, granting jobs to more than 8,000 workers.

Earlier this month, the Electric Reliability Council of Texas (ERCOT) reported a one-day record of nearly 10,300 MW produced by turbines on March 26, aided by recent transmission improvements and strong spring winds (ClimateWire, April 4).

A rise in new transmission capacity in 2013 emerged as another positive sign, with more than 10,000 MW installed. This trend is expected to continue as upcoming projects are slated to deliver an additional 60,000 MW of transmission capacity by 2018.

As in Texas, the industry’s hard-won new transmission capacity will open up new possibilities for construction and energy production, Salerno said.

“As those lines get completed, you will see these little pockets of growth,” she added.