Wind's Growth Stalled

Bill Opalka | Oct 31, 2010

 

When the wind industry released its second quarter results a few months ago, the low, 2007-type of capacity additions were hoped to be an aberration. It wasn't. The news only got worse. Now the last bad year is back with a vengeance.

The U.S. industry added just 395 megawatts of wind-powered electric generating capacity in the third quarter of 2010, making it the lowest quarter since 2007. Year-to-date installations stood at 1,634 megawatts, down 72 percent versus 2009, and the lowest level since 2006. In 2010, wind projects in the U.S. are being installed at half the rate as in Europe, and a third of the rate as in China, according to AWEA.

The second quarter saw just 700 megawatts added, which at the time was the low-water mark for installations over three years. The second-half recovery that the industry hoped for hasn't come.

The reasons are well-documented: low power prices, utilities and developers unable to negotiate satisfactory contracts, tight credit and expiring government subsidies.

Uncertain business conditions and lack of policy direction from Washington, like a national renewable electricity standard and extension of a favored Treasury grant program, were cited.

"Such policies are already in place in China and Europe, resulting in more than $35 billion of expected investment in 2010 - nearly four times the investment the U.S. will see this year," the American Wind Energy Association (AWEA) said.

"We're increasing our dependence on fossil fuels, impacting our national security, instead of diversifying our portfolio to include more renewables," said Denise Bode, CEO of AWEA.

"U.S. wind energy can again lead the world," Bode said, "but if federal policymakers do not act quickly to provide investment certainty through a Renewable Electricity Standard, and longer-term tax policy like our energy generation competitors enjoy, the U.S. wind industry will stall out."

Tax credit extensions for renewable energy in 2009 helped boost the U.S. wind industry to a record 10,010 megawatts in new capacity last year.

AWEA said other third-quarter results include:

 Total utility-scale wind capacity installed in the U.S. through September 2010 reached 36,698 megawatts.
 Some 4,700 megawatts of projects have started construction in the past six months.
 Over 10 new requests for proposals for utility-scale wind projects were issued in the quarter.
 At least nine new wind projects signed long-term power purchase agreements in the third quarter, which will result in over 700 megawatts of new wind capacity if all come to fruition.

In fact, one sign of the industry's poor health came to light last week when an East Coast developer cancelled its long-awaited entry into the stock market. First Wind pulled its initial public offering a day after it dropped its target price.

Worth noting, even if every last megawatt of project capacity now under construction was completed - highly unlikely - that would put 2010 additional capacity at just above 6,000 megawatts, the industry's worst-case scenario in early year projections.

At this point, the wind industry would accept that number.

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