But despite a reprieve for the industry's key financial incentive, the production tax credit (PTC), the volume of new steel in the ground will be low compared with last year's record-breaking 13.1GW.
The PTC — worth $0.22/kWh for the first ten years of a project's life — lapsed on 31 December. Two days later, a re-elected president Barack Obama signed into law a one-year extension of the PTC, along with the investment tax credit (ITC), which incentivises offshore and community wind by giving them a tax break worth 30% of a project's capital expenditure.
To gain either credit, a project now only needs to have started construction - rather than have been commissioned — by year end, meaning that both credits have effectively been extended by 18-24 months or more.
This gives developers more certainty earlier, notes Gabriel Alonso, chair-elect of the American Wind Energy Association (AWEA) and CEO of developer EDP Renewables (EDPR) North America. "You know you are bankable as soon as construction has started," he says.
Industry observers predict that turbine orders will pick up quickly. By mid-January, revamped business plans were being unveiled. Developer First Wind said it hoped to increase its 980MW operating portfolio by at least 50% over the next few years because of the tax credit extensions. Meanwhile EDPR, which last year had no plans to build wind in the US in 2013, says it will install some 400MW of wind by 2014-5.
By 2014, enough projects will already be under way to boost development to at least 6.6-8GW because of pent-up demand from 2013. However, as the PTC was not reinstated until early January, installations in 2013 will slow dramatically and development will not restart until the second half of the year.
"What happened happened too late," notes Dan Shreve, a partner at Make Consulting. Developers had iced their plans last year as the expiration approached and uncertainty took hold.
Continued low natural gas prices and sluggish electricity demand will create only a modest market pull, therefore players will continue to hedge their bets by expanding into the rest of the Americas, and Asia and into other renewables such as solar. "The (PTC) extension does not change the fact that demand for new (US) wind power capacity is low," said Make Consulting in a January note to clients.
Change of strategy
Meanwhile, the US industry is planning a change in lobbying strategy. AWEA has proposed a PTC phased out over six years, with its size reduced to 90% for projects completed in 2014, 80% for those completed in 2015; 70% for 2016; and 60% in both 2017 and 2018, with the tax credit ending after that. Getting the proposal attached to successful legislation will be a struggle, considering that Congress's political composition has not changed substantively despite the general election in November.
"We're also going to be making the case for the benefits of wind energy in saving consumers billions of dollars on their electric bills in all the states where renewable portfolio standards (RPS) are endangered," says Peter Kelley, AWEA's vice-president of public affairs. Kansas may be at the top of the endangered list — a bill to repeal the RPS was introduced there in January. Also under fire are the RPSs in North Carolina, Ohio, Michigan, New Mexico and Montana, say analysts.
The 13.1GW of 2012 new build was an 85% increase from 2011's additions of 7.1GW. Analysts predict at least 2.7-3GW of new US projects in 2013 compared with the 1-2GW projected with no PTC. Crucially, tax equity financing will be available this year in adequate quantities, say analysts, while banks will favour players with longer track-records.
Layoffs hit the US industry hard last year. There were more than 4,000, but that is likely to be "the tip of the iceberg", says Kelley.
Make's Shreve foresees consolidation among turbine manufacturers. One of the main surprises of 2012, he says, was the rapid contraction in the US tower industry despite the Department of Commerce in December imposing steep duties on towers from China of 45-71% because of alleged dumping.
The fate of Trinity Industries, a member of the Wind Tower Trade Coalition, initiator of the tower complaint against China, highlights the challenges US wind is facing. In 2012, Trinity bought fellow tower-coalition member DMI. Then, in November it emerged that it had temporarily closed one of DMI's tower plants in North Dakota, the state that is centre of the burgeoning Bakken shale field.
Apparently it was wind's most immediate competitor — shale oil and gas — that was benefitting. In the third quarter of 2012, Trinity said it had started converting wind-tower factories to manufacture railway carriages to haul shale oil and gas.
Two high-profile disputes will continue to be watched closely by the industry in 2013. A judge has been deciding whether the suit filed by Sany Group-affiliated Ralls Corp last autumn can proceed against the Obama administration. Sany officials have said that if the judge rejects the suit, they will sue Obama all the way to the Supreme Court, a lengthy procedure.
In a rare move, the US government blocked the Chinese-controlled company's Butter Creek wind projects in Oregon, citing national security concerns. And the dispute over intellectual property between Chinese turbine maker Sinovel and US-based electronics components company AMSC could advance again in China's courts once the Asian nation's transition of power to president Xi Jinping has been completed, in late February or March.
Offshore still stranded
Meanwhile, an offshore industry has struggled to take off in the US - no turbines have yet been installed and the projected start-date of projects has slipped. But the ITC's extension will buoy the industry. Analysts had expected Congress to allow the ITC to expire.
Two offshore projects may now proceed this year: EMI's controversial 468MW Cape Wind project off Massachusetts, if it secures financing, and Deepwater Wind's 30MW Block Island demonstration off Rhode Island. Analysts do not expect Block Island to face financing difficulties because it has not encountered much opposition. Still, industry observers only expect some 5GW installed offshore by 2015 or 2016, and 1GW by 2020. Most will be off the Atlantic coast.
In October, AWEA unveiled its first set of recommended practices for offshore wind projects. Developed with the Department of Energy and the National Renewable Energy Laboratory, the guidelines focus on five areas: structural reliability; manufacturing, qualification testing, installation and construction; equipment safety; operation and inspection; and decommissioning.
And in November, the US Department of the Interior announced the first-ever auctions for wind-project leases in federal waters, which are more than 5.6 kilometres offshore in almost all of the US. The auctions, for acreage off Virginia and off Massachusetts/Rhode Island, will probably occur in 2013.