Governors' Wind Energy Coalition

Higher towers and larger turbines propelled the United States to “all-time low” wind power prices and world-leading wind production numbers last year, but that won’t be enough to overcome the loss of federal tax incentives, the Department of Energy said today in its annual wind market report.

The report says total installed U.S. wind capacity is at about 66 gigawatts after an 8 percent growth spurt in 2014.

An $8.3 billion investment in U.S. wind projects and 4,854 megawatts of new capacity was a big improvement after a “lackluster” 2013, the report says.

Wind now generates almost 5 percent of the country’s end-use electricity. The United States is the global leader in wind production and second in installed capacity, but its end-use penetration level is dwarfed by more than 20 percent in Ireland, Portugal and Spain, and 39 percent in Denmark, DOE says.

Technology has spurred U.S. growth, the report says, with towers that are on average almost 50 percent higher at 272 feet and turbines that sweep through more than three times the area with the average 325-foot rotor that dwarf technology from 15 years ago. The larger rotors, originally used in low-wind-speed areas, are gaining popularity regardless of the quality of the wind resources in the area, DOE said.

The lower cost of technology has dropped wind prices to their lowest ever with new contracts hitting 2.35 cents per kilowatt hour and the average project costs at about $1,710 per kwh, an about 25 percent drop from five years ago, DOE says.

Wind power is cheapest in the windy plains of the Rocky Mountain states, where “the average price stream of wind [power purchase agreements] executed in 2013 or 2014 also compares favorably to a range of projections of the fuel costs of gas-fired generation extending out through 2040,” the report says.

But the good news in the U.S. wind industry may be short-lived, DOE warns.

By 2017, growth is uncertain because of the expired production tax credit, which Congress may renew again last minute at the end of the year, but that remains unclear (Greenwire, July 27).

“Continued low natural gas prices, modest electricity demand growth, and limited near-term demand from state renewables portfolio standards (RPS) have also put a damper on growth expectations,” the report says.

Contraction in the industry is already affecting manufacturing, as “far more domestic manufacturing facilities closed in 2014 than opened,” the report says. The industry currently employs 73,000 people related to development, siting, manufacturing, transportation and other industries, according to DOE.

DOE released a report earlier this year that envisioned wind supplying 35 percent of the nation’s electricity by 2050 if the production tax credit is preserved, technology costs continue to decline and fossil fuel prices rise (Greenwire, March 12).