At the same time, 2009 was a year of upheaval, with the global financial crisis impacting the wind energy industry and with federal policy changes enacted to push the industry towards continued aggressive expansion. The year 2010, meanwhile, is anticipated to be one of some retrenchment, with expectations for fewer wind power capacity additions than seen in 2009.
The rapid pace of development and change within the wind farm industry has made it difficult to keep up with trends in the marketplace, yet the need for timely, objective information on the industry and its progress has never been greater. This report – the fourth in an ongoing annual series – attempts to meet this need by providing a detailed overview of developments and trends in the United States wind energy market, with a particular focus on 2009.
As with previous editions, this report begins with an overview of key installation-related trends: trends in wind power capacity growth, how that growth compares to other countries and generation sources, the amount and percentage of wind energy in individual states and serving specific utilities, and the quantity of proposed wind power capacity in various interconnection queues in the United States.
Next, the report covers an array of wind power industry trends, including developments in wind turbines manufacturer market share, manufacturing and supply-chain investments, wind turbines and wind farm size, project financing developments, and trends among wind farm developers, project owners, and power purchasers.
The report then turns to a discussion of wind project price, cost, and performance trends. In so doing, it reviews the prices paid for wind power in the United States, and how those prices compare to short-term wholesale electricity prices. It also describes trends in installed wind power project costs, wind turbines transaction prices, project performance, and operations and maintenance expenses.
Next, the report examines other policy and market factors impacting the domestic wind power market, including federal and state policy drivers, transmission issues, and grid integration. Finally, the report concludes with a preview of possible near-term market developments.
This fourth edition updates data presented in the previous editions, while highlighting key trends and important new developments from 2009. New to this edition is a discussion of trends in the hub height and rotor diameter of wind turbines installed in the United States, new data on wind turbine and component imports into and exports from the United States, an expanded discussion of offshore wind energy development, and data on wind power curtailment.
The importance of the American Recovery and Reinvestment Act of 2009 (the Recovery Act) to wind energy in 2009 is reflected throughout the report. The report concentrates on larger-scale wind turbines, defined here as individual turbines or projects that exceed 100 kW in size.
The U.S. wind power sector is multifaceted, however, and also includes smaller, customer-sited wind turbines used to power residences, farms, and businesses.
Much of the data included in this report were compiled by Berkeley Lab, and come from a variety of sources, including the American Wind Energy Association (AWEA), the Energy Information Administration (EIA), and the Federal Energy Regulatory Commission (FERC). The Appendix provides a summary of the many data sources used in the report, and a list of specific references follows the Appendix.
Data on 2009 wind power capacity additions in the United States are based on information provided by AWEA; methodological differences exist in the processing of those data, however, and the data presented here therefore varies somewhat relative to AWEA.
In other cases, the data shown here represent only a sample of actual wind power projects installed in the United States; furthermore, the data vary in quality. As such, emphasis should be placed on overall trends, rather than on individual data points. Finally, each section of this document focuses on historical market information, with an emphasis on 2009; with the exception of the final section, the report does not seek to forecast future trends.
Installation Trends
Wind Power Additions in 2009 Shattered Old Records, with roughly 10 GW of New Capacity Added in the United States and $21 Billion Invested
The U.S. wind power market delivered another record-shattering year in 2009, with 9,994 MW of new capacity added, bringing the cumulative total to more than 35,000 MW (Figure 1).3 This growth translates into nearly $21 billion (real 2009 dollars) invested in wind power project installation in 2009, for a cumulative investment total of $66 billion since the beginning of the 1980s.
Wind power installations in 2009 were not only the largest on record in the United States, but were 20% higher than the previous U.S. record, set in 2008. Cumulative wind power capacity grew by 40% in 2009. This was achieved despite the financial crisis that roiled the wind power industry in 2009, and the significant reductions in wholesale electricity prices that began in mid- to late-2008 and have continued to the present.
A variety of market drivers allowed year-on-year installation growth to persist in 2009: carryover of projects initially planned for completion in 2008 (but, when the production tax credit was extended through 2012, ultimately came online in 2009); elements of the Recovery Act, including the Section 1603 Treasury Grant Program; the expiration of bonus depreciation rules at the end of 2009; state renewables portfolio standards (RPS); concerns about global climate change; and continued uncertainty about the future costs and liabilities of natural gas and coal facilities.
The yearly boom-and-bust cycle that characterized the U.S. wind power market from 1999 through 2004 – caused by periodic, short-term extensions of the federal production tax credit (PTC) – has now been replaced by five consecutive years of growth. With federal tax incentives for wind energy now extended through 2012, significant capacity additions and a semblance of near-term market stability might be expected.
On the other hand, the global financial crisis, lower wholesale electricity prices, and lower demand for renewable energy have created expectations for a slower pace of wind power development in 2010. Moreover, wind power capacity additions in 2009 were buoyed, in part, by projects that were initially slated to be completed in 2008 but that carried over into 2009 when the PTC was extended, somewhat masking the underlying challenges facing the sector. With the extension of federal incentives through 2012, there is less motivation to complete projects in 2010.
Wind Power Contributed 39% of All New U.S. Electric Generating Capacity in 2009
Wind power now represents one of the largest new sources of electric capacity additions in the United States. For the fifth consecutive year, wind power was the second-largest new resource added to the U.S. electrical grid in terms of aggregate capacity, behind the 11,500 MW of new natural gas plants added in 2009, but ahead of the 3,200 MW of new coal.
New wind power projects contributed roughly 39% of the new nameplate capacity added to the U.S. electrical grid in 2009, compared to 44% in 2008, 35% in 2007, 18% in 2006, 12% in 2005, and less than 4% from 2000 through 2004.
The same trend is apparent in Europe. In 2009, for example, more wind power was installed in the EU than any other generating technology, with 39% of all capacity additions coming from wind power. From 2000 through 2009, 33% of capacity additions in the EU came from wind power, second only to natural gas.
EIA’s reference-case forecast projects that total U.S. electricity supply will need to increase at an average pace of roughly 49 TWh per year from 2010 to 2035 in order to meet demand growth. On an energy basis, the annual amount of electricity expected to be generated by the new wind power capacity added in 2009 represents nearly 60% of this average annual projected growth in supply.
Given the relatively low capacity factor of wind power, one might initially expect that percentage contribution of wind power on an energy basis would be much lower than on a capacity basis. This is not necessarily the case, as documented by a review of capacity and electricity production data from EIA, in part because even though combined-cycle gas plants can be operated as baseload facilities with high capacity factors, those facilities are often run as intermediate plants with capacity factors that are not dissimilar from that of wind power. Combustion turbine gas facilities run at even lower capacity factors.
By extension, if wind power additions continued through 2035 at the same pace as set in 2009, then nearly 60% of the nation’s projected increase in electricity generation from 2010 through 2035 would be met with wind electricity. Although future growth trends are hard to predict, it is clear that a significant portion of the country’s new generation needs is already being met by wind farm.
The United States Continued to Lead the World in Cumulative Wind Power Capacity, but Was Overtaken by China in Annual Additions
On a worldwide basis, more than 38,000 MW of wind power capacity was added in 2009, the highest volume achieved in a single year, and up from about 28,000 MW in 2008, bringing the cumulative total to approximately 160,000 MW. In terms of cumulative installed wind power capacity, the United States ended the year with 22% of total worldwide capacity, and is the leading market in the world by this metric.
Over the past 10 years, cumulative wind power capacity has grown an average of 30% per year in the United States, slightly higher than the 28% growth rate in worldwide capacity.
After four years of leading the world in annual wind power capacity additions, the U.S. dropped to second place in 2009, capturing roughly 26% of the worldwide market (behind China’s 36% market share7), down from 29% in 2008 and 27% in 2007. Spain, Germany, and India rounded out the top five countries in 2009 for annual capacity additions.
Wind power additions in China are from BTM, and include a considerable amount of capacity that was installed but that had not yet received transmission interconnection by the end of 2009. All of the U.S. capacity reported here, on the other hand, was capable of electricity delivery.
In fact, if only considering the new wind power capacity that achieved transmission interconnection and was therefore capable of delivering electricity to the grid by the end of 2009, the United States would have again led the world in annual capacity additions in 2009.
Yearly and cumulative installed wind power capacity in the United States are from AWEA, while global wind power capacity in 2009 comes from BTM, but updated with the most recent AWEA data for the United States. Global wind power capacity in earlier years comes from the Earth Policy Institute.
Some disagreement exists among these data sources and others, e.g., Windpower Monthly and the Global Wind Energy Council.
Several countries are beginning to achieve relatively high levels of wind energy penetration in their electricity grids. Using this approximation for the contribution of wind power to electricity consumption, and focusing only on the 20 countries with the greatest cumulative installed wind power capacity, end-of-2009 installed wind power is projected to supply the equivalent of roughly 20% of Denmark’s electricity demand, 14% of Portugal’s, 14% of Spain’s, 11% of Ireland’s, and 8% of Germany’s. In the United States, the cumulative wind power capacity installed at the end of 2009 would, in an average year, be able to supply roughly 2.5% of the nation’s electricity consumption (up from 1.8% at the end of 2008, 1.2% at the end of 2007, and 0.8% at the end of 2006).
In terms of actual 2009 deliveries, wind energy represented 1.8% of net electricity generation and 2.0% of national electricity consumption in the United States. These figures are below the 2.5% figure provided above because 2.5% is a projection based on end-of-year 2009 wind power capacity. On a global basis, wind energy’s contribution at the end of 2009 is estimated to be 1.8%.
Primary authors: Ryan Wiser, Lawrence Berkeley National Laboratory, Mark Bolinger, Lawrence Berkeley National Laboratory. With contributions from Galen Barbose, Naïm Darghouth, Ben Hoen, and Andrew Mills (Berkeley Lab), Kevin Porter and Sari Fink (Exeter Associates), Suzanne Tegen (National Renewable Energy Laboratory)
www1.eere.energy.gov/windandhydro/pdfs/2009_wind_technologies_market_report_slides.pdf
