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August 16, 2012
On August 14, the Department of Energy (DOE) and Lawrence Berkeley National Laboratory (LBNL) released the 2011 Wind Technologies Market Report , their analysis of the 2011 U.S. wind market. The report examines last year's business climate, including installed wind capacity, the cost of wind power, and the policy environment.
According to the report, 6.8 gigawatts (GW) of new wind capacity were installed in 2011, representing an investment of $14 billion. This is an increase of 31 percent from 2010 levels but still less than the amount installed during the historic highs of 2008 and 2009.
Wind power accounted for 32 percent of new U.S. generation capacity in 2011, second only to natural gas. Cumulative installed capacity grew 16 percent to 47 GW in 2011 – and in August surpassed 50 GW – which places the United States second globally, after China. Of the states, California had the most new capacity installed in 2011 with 921 megawatts (MW), while on a cumulative basis Texas is still the clear leader with over 10 GW of installed wind capacity. Two states, Iowa and South Dakota, generate more than 20 percent of their in-state electricity from wind power.
The U.S. wind industry employed an estimated 75,000 people in direct and indirect jobs at the end of 2011. There are nearly 500 factories across 44 states that manufacture components for wind projects. Nearly 67 percent of the turbine components installed in the United States last year were manufactured in this country – nearly double the domestic content of wind projects in 2005. Exports of domestic wind turbine components increased from $14 million in 2007 to $147 million in 2011.
Wind project costs decreased in 2011. Turbine prices were in the range of $900 to $1,350 per kilowatt (kW), a reduction from about $1,500/kW in 2008. General Electric and Vestas each had 29 percent of the market, with the remainder split among 18 other companies – a far cry from 2005, when five companies were competing for the U.S. market. Installed capital costs decreased from $2,200/kW in 2010 to $2,100/kW in 2011, and reported operations and maintenance costs decreased as well. Lower project costs reduced average, capacity-weighted, long-term power purchase agreements from $59 per megawatt-hour (MWh) to $35/MWh. Indeed, wind power could help to reduce consumer electricity rates in some markets (see EESI's May 22 briefing, Can Renewable Energy Make American Electricity More Affordable, Reliable, and Abundant than Ever? ).
The DOE-LBNL study highlights the importance of stable federal policy for continued industry growth. With the expiration of the Investment Tax Credit and Section 1603 Treasury grant at the end of 2011, the remaining federal incentive driving growth is the Production Tax Credit (PTC), which provides developers a tax credit equivalent to 2.2 cents per kilowatt-hour of electricity generated for the first 10 years. The PTC will expire at the end of this year. Without the incentive, very few projects will be installed in 2013 according to most industry experts. Already manufacturers, such as Vestas , are feeling the effects of this policy uncertainty and laying off employees. Without an extension, another 37,000 jobs are at risk . A one-year extension of the PTC is estimated to have a net cost of $12.1 billion over 10 years , while the policy can garner up to $20 billion in private investment each year. The Senate Finance Committee voted to approve a one-year extension of the PTC on August 2 in a strong bipartisan vote (19-5) as part of The Family and Business Tax Cut Certainty Act of 2012 and now Senate leadership must decide how to proceed.
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