Governors' Wind Energy Coalition

Wind energy surged to provide 6 percent of U.S. electricity last year, but long-term growth is “uncertain” because of tax policy and natural gas prices, according to three reports released today by the Department of Energy.

The sweeping reports from three national labs assess the status through 2016 of U.S. utility-scale wind, offshore wind and distributed wind. Helped by the production tax credit and declining costs, wind added more than 8,000 megawatts of new capacity last year, or about 27 percent of electricity additions. Only solar and natural gas added more power.

Successes for wind last year included the launch of the nation’s first commercial offshore wind farm, the 30-MW Block Island project off Rhode Island. Additionally, 14 states provided more than 10 percent of their power with wind. Utility-scale wind also came online in states like North Carolina.

“Recent and projected near-term growth is supported by the industry’s primary federal incentive — the production tax credit (PTC) — as well as a myriad of state-level policies. Wind additions have also been driven by improvements in the cost and performance of wind power technologies, yielding low power sales prices for utility, corporate, and other purchasers,” the Department of Energy said.

Other findings:

• Forty states and Puerto Rico now operate utility-scale wind projects. Iowa and South Dakota produced more than 30 percent of their electricity from wind.

• The United States supports 101,738 wind-related jobs, up 32 percent from two years ago.

• Wind is competitive with traditional power sources such as natural gas in many locations, particularly when sold at a fixed 20-year price.

• There are more than 20 projects in the development pipeline totaling 24,135 MW of potential installed capacity of offshore wind. Most activity is in the Atlantic Ocean, but there are also proposals in the Pacific Ocean, Great Lakes and Gulf of Mexico.

• Distributed or small wind, which powers homes and businesses directly, reached 992 MW. That covers 77,000 turbines in all 50 states, and constitutes about 1 percent of all U.S. wind power capacity.

Despite the rapid growth, there is looming uncertainty because of the phaseout of the PTC, according to DOE. In December 2015, Congress passed a five-year, phased-down extension of the tax credit, which provides the full PTC for projects that started construction before the end of 2016.

Forecasts after 2021 show a downturn because of the PTC phaseout, low natural gas prices, modest electricity demand growth and less of a push from state renewable portfolio standards, DOE said. The percentage of wind driven by renewable portfolio standards fell to about 21 percent last year, when it was closer to 50 percent in previous years.

Inadequate transmission and competition with solar also could dampen future growth in some regions, DOE said.

“At the same time, the potential for continued technological advancements and cost reductions enhance the prospects for longer-term growth, as does burgeoning corporate demand for wind energy,” the reports said.

The analysis comes as DOE is conducting a grid study examining the effect of renewable and energy subsidies on baseload power. Energy Secretary Rick Perry was a strong backer of wind as governor of Texas, although the president’s fiscal 2018 budget request would sharply cut funding for wind energy research at DOE.

Click here for the 2016 Wind Technologies Market Report from Pacific Northwest National Laboratory.

Click here for the 2016 Offshore Wind Technologies Market Report from the National Renewable Energy Laboratory.

Click here for the 2016 Distributed Wind Market Report from the Pacific Northwest National Laboratory.