Wind costs at record lows, but a downturn looms — DOE

Source: By Carlos Anchondo, E&E News reporter • Posted: Wednesday, August 14, 2019

Wind farm. Photo credit: Department of Energy/WikipediaA new Department of Energy report shows prices for new wind projects are competitive with other types of generation. Department of Energy/Wikipedia

Although wind energy now makes up 6.5% of the country’s electricity supply, low natural gas prices and a phaseout of the production tax credit could put a brake on growth in coming years, according to a new Department of Energy report.

Prepared by the Lawrence Berkeley National Laboratory, the study found that wind added more than 7,500 megawatts of new capacity last year, with 20 states installing new utility-scale wind turbines.

Texas, where wind generated more electricity than coal through the first six months of this year, installed the most capacity in 2018, with more than 2,300 MW (Climatewire, July 23). Three states — Oklahoma, Iowa and Kansas — supplied between 31% and 36% of all in-state electricity generation.

Only natural gas and solar added more power than wind, the lab said.

Favorable tax policy and various state-level policies, along with improvements in the cost and performance of wind technologies, are among several factors contributing to greater capacity.

“Wind energy prices — particularly in the central United States, and supported by federal tax incentives — are at all-time lows, with utilities and corporate buyers selecting wind as a low-cost option,” said Ryan Wiser, a senior scientist at Berkeley Lab.

Continuing a trend, developers installed bigger turbines in order to “optimize wind project cost and performance.” The average rotor diameter in 2018 was roughly 379 feet, a 2% increase over 2017 but a 141% jump from between 1998 and 1999.

Average turbine capacity and hub height also increased, but rotor scaling has been “especially significant” in recent years, the report said. Bigger rotors and blades cover a wider area, which then increase the turbine’s capacity and possible production (Climatewire, Aug. 5).

It also means that fewer towers are required to generate the same amount of electricity, lowering project costs.

Other key findings from the report include:

  • The capacity weighted average installed project cost in 2018 was $1,470 per kilowatt, with developers on projects now under construction estimating that lower costs — in the $1,100-$1,250 range — are not far off.
  • The U.S. wind industry supported an “all-time high” of 114,000 jobs and invested $11 billion in new plants.
  • Danish company Vestas Wind Systems A/S and American giant General Electric Co. accounted for 78% of the U.S. wind power market last year, with GE making up 40% of all turbine installations in the country.

Analysts see strong growth in wind capacity over the near term but point to the five-year phased expiration of the PTC — the industry’s primary federal incentive — as explanation for a projected decline in wind power capacity additions.

Various forecasts show wind additions of 9,000 to 12,000 GW in 2019 and 11,000 to 15,000 GW in 2020, according to DOE.

Yet, analysts forecast a downturn for 2021 to 2028 because of a variety of factors. Along with the low PTC phaseout, low natural gas prices, modest electricity demand growth and limited transmission infrastructure could stall growth, the report noted.

“At the same time, the potential for continued cost reductions may enhance the prospects for longer-term growth, as might burgeoning corporate demand for wind energy and continued [renewable portfolio standard] requirements,” the report said. “Moreover, new transmission in some regions is expected to open up high-quality wind resources for development.”

Ultimately, the analysts found that wind additions, especially after 2020, remain “uncertain.”

Achieving 20% wind energy by 2030 and 35% by 2050, the DOE report found, would “likely require efforts that go beyond business-as-usual expectations.”

The DOE report came months after President Trump reiterated past criticisms of wind power, claiming that the noise turbines emit is a cause of cancer — remarks that prompted sharp pushback from wind supporters (Greenwire, April 4).