Two DOE Reports Analyze U.S. Wind Energy Growth

September 15, 2015

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The U.S. Department of Energy recently released two reports that provide a detailed analysis of the wind energy industry, technology and performance trends and costs: the 2014 Wind Technologies Market Report produced by Lawrence Berkeley National Laboratory (LBNL) and the 2014 Distributed Wind Market Report produced by Pacific Northwest National Laboratory.

The 2014 Wind Technologies Market Report noted that U.S. 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. A new trend identified by the report shows utility-scale turbines with larger rotors designed for lower wind speeds have been increasingly deployed across the country in 2014.

According to LBNL’s report, U.S. wind power capacity additions rebounded in 2014, with $8.3 billion invested in 4.9 gigawatts of new additions. The overall trends in capacity appear positive. Wind power has totaled 33% of all new U.S. electric capacity additions since 2007, and currently contributes almost 5% of the nation’s end-use electricity demand. In nine states, wind provides more than 12% of total electricity generation, and in three states, more than 20%.

Further, enabled by technology advancements including increasing turbine size, wind projects are becoming economically viable in a growing number of locations across the nation. Since the late 1990s, the average nameplate capacity of wind turbines installed in the United States has increased by 172% to 1.9 megawatts (MW) in 2014. Also, the average turbine hub height has increased by 48% to 83 meters, and the average rotor diameter has increased by 108% to 99 meters. This scaling has enabled wind energy developers to build projects more economically at sites with lower wind speeds. Moreover, turbines originally designed for lower wind speeds are now regularly deployed in sites with higher wind speeds, further boosting project performance.

The report details how lower wind turbine prices continue to push down the installed project costs. Because wind turbine prices have fallen between 20% and 40% from their highs in 2008, project-level costs are declining. Wind projects built in 2014 had an average installed cost of $1,710/kilowatt (kW), down almost $600/kW from their peak in 2009 and 2010.

As demand has risen, employment in the wind sector has increased from 50,500 workers in 2013 to about 73,000 workers in 2014. Additionally, the profitability of turbine suppliers has generally rebounded during the last 2 years, after a number of years in decline.

Exports of U.S. wind-powered generating sets have soared from $16 million in 2007 to $488 million in 2014; however, despite the significant growth in the domestic supply chain over the last decade, far more domestic manufacturing facilities closed in 2014 than opened. Going forward, the report spotlights the fact that availability of federal incentives for wind projects that began construction by the end of 2014 will lead to significant new builds in 2015 and 2016.

The 2014 Distributed Wind Market Report states that distributed wind—installed for the purpose of generating electricity for on-site and local loads—reached a cumulative capacity of almost 1 gigawatt (906 MW) in the United States in 2014. That tally reflects nearly 74,000 wind turbines deployed across all 50 states, Puerto Rico, and the U.S. Virgin Islands. In total last year, 63.6 MW of new distributed wind capacity was added, representing nearly 1,700 turbines and $170 million in investment across 24 states.

However, 2014 was a mixed year for the distributed wind market. The installations of large-scale turbines (greater than 1 MW) in distributed applications grew almost threefold from 20.4 MW in 2013 to 57.5 MW in 2014, but the markets for small distributed wind systems (up to 100 kW) and midsize turbines (101 kW to 1 MW) continued to struggle since achieving record sales in 2008 through 2012. Small and midsize turbines added only 3.7 MW and 2.4 MW in 2014, respectively, compared to 5.6 MW and 4.4 MW the previous year.

According to the report, residential applications accounted for 36% of U.S. distributed wind deployed in 2014 on a per-project basis, but just 1% on a capacity basis. Agricultural applications accounted for 34%, commercial for 8%, and government, institutional, and industrial each for 7% on a per-project basis. In 2014, New Mexico, Texas, and California were the top states in terms of adding distributed wind capacity. Minnesota, New York, Nevada, and Iowa led the nation for the number of small wind turbines deployed. Currently, 16 states have more than 10 MW of cumulative distributed wind capacity.

Exports remained an important source of revenue for U.S. manufacturers of small wind turbines. Seven U.S. manufacturers shipped 11.2 MW in 2014, at a value of $60 million. Although this is down slightly from the 13.6 MW of exports reported from 10 manufacturers in 2013, it is up from the 8 MW reported by eight manufacturers in 2012. The top export markets in terms of capacity were Italy, the United Kingdom, and South Korea.

Overall, the outlook for distributed wind in the United States remains varied, with market drivers including new financing schemes and certification requirements, and new export markets for domestic manufacturers. Challenges continue to be competition from solar photovoltaics, permitting and soft-cost barriers, and the low cost of other sources of electricity.