Wind Farms

Wind Farms

August 15, 2013 | By Keith Martin in Washington, DC

Wind farms accounted for 43% of new generating capacity built in the United States in 2012, but 2013 is expected to be a slow year while developers gear back up, according to a new report by Ryan Wiser and Mark Bolinger of the Lawrence Berkeley National Laboratory in early August.

The authors expect an uptick in projects that need financing in 2014 given the need to start construction of new projects by year end 2013 to qualify for federal tax credits. However, the outlook for 2015 and beyond is uncertain.

The US has 60,000 megawatts of installed wind capacity. Only 1.6 megawatts were added in the first quarter of 2013. Just 537 megawatts were under construction as of March 31 this year. The biggest gains in 2013 will be in natural gas and solar. The Solar Energy Industries Association reported that solar accounted for 49% of new electric generating capacity installed during the first quarter of 2013, and the fast-growing solar rooftop residential market grew by 53% year on year to the end of the first quarter.

Wind turbine prices are currently in the $950,000 to $1.3 million range per megawatt. The average installed cost per megawatt for wind farms completed in 2012 was $1.94 million. Merchant or quasi-merchant projects accounted for 19% of new wind capacity additions in 2012.

Electricity prices under long-term power contracts have fallen to the lowest levels since 2000 to 2005, but construction costs have increased since then, making the economics for wind projects more challenging. The average price for contracts signed in 2011 and 2012 was $40 a megawatt hour. The prices vary by region, with prices in the $50 to $90 range in the West, $20 to $40 in the interior of the country and $50 to $70 in the Great Lakes and Northeast.

Utilities in the Southwest and Texas signed another 1,500 megawatts of long-term contacts with wind companies in recent weeks at prices ranging from $22 to $33 a megawatt hour.

Renewable portfolio standards that require utilities in 29 states and the District of Columbia to supply a certain percentage of their electricity from renewable energy are expected to require only another 3,000 to 5,000 megawatts of renewable generating capacity each year during the period 2013 through 2020. The industry is fighting efforts by conservative interest groups to roll back these standards in various states, but so far the line has held.

Wind accounts for 20% of more of electricity supply in three states: Iowa (25%), South Dakota (24%) and Kansas (20%). This compares to an average of 4.4% nationwide. The top four states for new wind construction in 2012 were Texas, California, Kansas and Oklahoma.