U.S. wind energy prices hit record low as industry continues rapid growth — DOE

Source: Daniel Cusick, E&E reporter • Posted: Thursday, August 13, 2015

The U.S. wind energy sector grew 8 percent in 2014, boosting domestic capacity to nearly 66,000 megawatts while further reducing costs through greater operational efficiencies and technology improvements, according to the Department of Energy’s latest assessment of the renewable energy sector.

The “2014 Wind Technologies Market Report,” compiled by the Lawrence Berkeley National Laboratory, said the industry’s solid performance in 2014 helped solidify the United States’ position as the world’s second-largest wind energy producer behind China and will aid in meeting recently established U.S. EPA rules aimed at reducing energy sector carbon dioxide emissions.

The report also finds that wind energy prices are at an all-time low and are competitive with wholesale power prices and traditional power sources across many areas of the United States. The national average levelized price of wind power sold under contract to utilities in 2014 was roughly 2.35 cents per kilowatt-hour, down from nearly 7 cents per kWh in 2009, according to the analysis.

Wind energy also represents a significant economic boom for rural areas, according to DOE, estimated at $8.3 billion in new investment for 2014. Employment in the sector has also increased to 73,000 jobs — up from roughly 50,000 jobs in 2013, according to DOE. Those jobs are related to development, siting, manufacturing, transportation and other wind energy support industries.

“Through continued investments and the help of stable policies, we’re confident that wind power will keep playing a major role in creating jobs and shaping America’s clean energy future,” Energy Secretary Ernest Moniz said in a statement announcing the findings.

The industry’s growth is reflected in strong demand for both utility-scale wind energy, where facilities sell their output to utilities under power purchase agreements, as well as by expansion of smaller-scale distributed wind energy where a turbine’s power is routed directly to a local grid or user, such as a farm or rural business.

As of last year, the distributed wind energy sector had an installed capacity of 906 MW, enough to power 168,000 average U.S. homes, according to a companion report also released yesterday by DOE and the Pacific Northwest National Laboratory.

Moving beyond the Midwest and Great Plains

Beyond the industry’s overall growth in 2014, DOE notes that the deployment of larger and more advanced rotors that allow energy to be produced at lower wind speeds has helped expand the U.S. wind energy market beyond its traditional core states in the Great Plains, the Pacific Coast and parts of the Midwest.

Wind industry trade group officials welcomed DOE’s latest findings, saying they add credence to the sector’s claims that it is among the most scalable and affordable forms of renewable energy.

But those same officials said that maintaining strong growth hinges on Congress renewing a federal production tax credit (PTC) for wind energy developers that pays 2.3 cents per kWh for all generation placed on the grid for 10 years.

“While this report is good news, extending the Production Tax Credit and Investment Tax Credit remains critical for keeping Americans at work, reducing the cost of wind energy and continuing to scale up this homegrown resource through the end of this decade,” said Tom Kiernan, CEO of the American Wind Energy Association, in a statement.

The Senate Finance Committee last month voted to extend the PTC through 2016 after it expired at the end of 2014. But PTC extender legislation has faced opposition in the House of Representatives, where conservatives have criticized the tax breaks as a waste of taxpayer dollars. They also say the PTC upholds an industry whose success or failure should be determined by market forces, not government supports.

In a letter to House leaders last month, the American Energy Alliance, Heritage Action for America and other conservative groups urged Congress to permanently end tax credits for wind energy. “Eliminating the PTC allows the market to decide when wind power makes sense for consumers, and when it doesn’t,” the groups said (Greenwire, July 27).