Wind hit installation record as developers raced to claim tax credit — report

Source: Nick Juliano, E&E reporter • Posted: Monday, January 21, 2013

Last year was a banner year for the wind industry as developers raced to complete projects ahead of the then-looming expiration of a key tax incentive, according to new research released today.

About 13,200 megawatts of new wind capacity was installed in 2012, with more than 40 percent of those installations coming in December, according to the analysis by Bloomberg New Energy Finance, a nonpartisan research firm that maintains a database of transactions and projects in wind, solar and other clean energy sectors. The record pace of installations was spurred by the potential expiration of the production tax credit (PTC), which Congress ultimately extended Jan. 1 as part of the broader “fiscal cliff” legislation.

Wind now accounts for about 60,000 MW installed capacity in the United States, making up 6 percent of total capacity in the domestic electricity sector, according to the BNEF findings. The firm also pointed to improved economics in the wind sector, with equipment prices falling and capacity of turbines rising to bring the overall levelized cost of wind electricity down 21 percent since 2010.

Last year’s installations topped the previous record, set in 2009 with 10,000 MW installed, and more than doubled 2011’s 6,500 MW installed, according to the firm. The record came in the same year that overall investment in U.S. clean energy sectors fell by nearly a third as developers held off planning projects for this year, when the pace of new wind farm construction is expected to fall even with the PTC extension (Greenwire, Jan. 14).

That wind grew so significantly even in the face of cheap natural gas is an encouraging sign for the industry. According to BNEF, wind, aided by the PTC, can compete with natural gas in some parts of the country. For example, in the extremely windy Texas Panhandle, wind-generated electricity has a levelized cost below $30 per megawatt-hour, compared to wholesale power prices, at today’s natural gas prices, of $25 to $30 per MWh in the region.

Furthermore, most of the added capacity — 11,000 MW — came in states “without any near-term state-mandated demand” driven by renewable portfolio standards, said Amy Grace, the firm’s lead analyst for the North American wind sector.

“It’s clear that the economics, aided by the PTC, drove wind growth in 2012. … This means that in most areas, utilities are buying wind power because they want to, not because they have to,” Grace said in a statement.