When it comes to projects that have progressed to the point of holding power purchase or turbine supply agreements, however, the data shows that the neighbouring countries are not that far apart.
The numbers point to the significant differences between the two markets. Canada, for the most part, is characterised by long lead-time procurement processes that create relatively transparent and predictable construction cycles. US developers, on the other hand, packed as much new build as they could into 2012 in order to beat the looming year-end expiration of the $0.022/kWh production tax credit (PTC). Now, with the PTC renewed for projects that start construction in 2013, the industry needs to quickly ramp back up.
"Developers are starting to thaw out projects and looking for opportunities to move them forward," says Matt Kaplan, associate director at consultancy IHS Emerging Energy Research.
Low demand in the US
The challenge, adds Kaplan, is that they will be facing lower levels of demand for their product. Some of the core markets for wind, such the Midwest, have met their near-term renewable energy targets and have no need to buy more right now. Some projects could move ahead without power purchase agreements (PPAs) in an area such as West Texas, where they can take advantage of growing demand, new transmission build and high capacity factors to compete in the open market. But Kaplan expects most of the industry's focus to be on markets with mandates, known as renewable portfolio standards (RPS), that have yet to be met. "The areas that still have fairly robust RPS demand are markets like New England. We also project California, especially over the long term, will have a lot more demand," says Kaplan.
Wind's growing cost-competitiveness could draw in other states as well, says Amy Grace, lead US wind analyst for Bloomberg New Energy Finance (BNEF). BNEF counted 13.2GW of new installations in the US in 2012. Of that, 11GW was in states without any immediate RPS demand. A key reason, Grace says, is that utilities in regions with strong wind regimes were signing PPAs last year at prices as low as $30/MWh.
"Wind was being installed because it was cheap, because utilities wanted to take advantage of that to buy power now to meet longer-term targets, or because they liked the renewable attributes of the power regardless of any state mandate," she says.
With the PTC still in place, Grace expects that to continue. One emerging market she expects to be strong is the US south-east. The wind resource in the region is poor, but Alabama Power and the Tennessee Valley Authority have taken the lead in signing PPAs with projects located in neighbouring states and importing the power on to their systems. "One of the areas that will be interesting to watch is whether more of those utilities down there follow suit," says Grace. If they do, pipeline projects Windpower Intelligence is tracking in states such as Kansas, Oklahoma, Nebraska and Illinois could find buyers for their output.
Windpower Intelligence's database, TradeWind Energy's 300MW Buffalo Dunes wind farm in Kansas, has tapped into the south-east potential with an agreement to sell 202MW of its output to Alabama Power.
The largest project on the list is testing the waters in another new market for US wind. Although it still has to finalise financing, analysts expect Energy Management's 468MW Cape Wind offshore project to move ahead, perhaps beginning construction as early as this year. But it is unlikely to open the floodgates to offshore wind in North America, says Dan Shreve, Make Consulting's US-based partner."We do not expect to see significant movement in the coming years. The pricing is still substantially higher than onshore wind power."
The large Canadian projects in the construction queue reflect the fact that major developers are focusing on Ontario and Quebec.
EDF EN Canada, a subsidiary of France's EDF Energies Nouvelles, has more than 1GW of PPAs in Quebec. It is teaming up with Canadian pipeline giant Enbridge to bring the 300MW Lac Alfred and 150MW Massif du Sud projects online this year, and will start construction of the first stage of its 350MW Riviere-du-Moulin wind farm. In Ontario, Pattern Energy and Samsung have contracts for 870MW of wind, led by the 270MW South Kent project and, in partnership with Edmonton-based Capital Power Corporation, the 270MW K2 project. Much of Florida-based NextEra's work in the next two years will be focused on Ontario as well, with 570MW of contracted projects to build.
While wind producers in Alberta's competitive power market are being challenged by low power prices, a unique contract with California utility PG&E for renewable-energy credits is allowing Greengate Power to move forward with its 300MW Blackspring Ridge 1 project, with construction expected to start this spring.
EDF EN's use of Repower turbines in its Quebec projects has given the German turbine maker a big boost in North America. Enercon, which has no presence in the US, has also used its strength in Canada to rank among the top turbine suppliers. But for the most part, analysts expect to see established players such as GE, Siemens and Vestas continue to dominate the market. "Really the top manufacturers are here to stay, and for some of the smaller ones, there may not be as much of an opportunity for them," says Kaplan. "The market is already oversupplied with capacity, especially as we see a flatter growth trajectory over time."
While turbine supply has remained steady, the same cannot be said for the developer landscape. A maturing market and ongoing diversification by both US and Canadian power producers has increased mergers and acquisition activity. Acquisitions in Canada hit the 2.5GW mark in both 2011 and 2012, says BNEF's Grace, more than triple the 700MW of 2010. Kaplan expects it to continue in Canada, and perhaps pick up in the US as smaller developers face few opportunities and more intense competition. "I think we will see that as companies really look at the market realities."
GROWTH IN LATIN AMERICA BY MICHAEL MCGOVERN
Regional turbine manufacturer presence remains practically exclusive to Brazil, due to that government's strict local content demands. Companies planning to build or expand facilities in Brazil include Siemens, Wobben, Acciona, Gamesa, Vestas, Alstom, Suzlon, Impsa, GE and Clipper.
Brazil and Mexico still lead the way
Brazil's hitherto roaring progress could be meeting obstacles, however. Low wind-power sales prices - achieving just BRL 87.9/MWh ($43/MWh) at the last power auction in December - are squeezing margins. Regulator Aneel says power line construction delays could hold up commissioning on 1.4GW by end-2013.
However, state utility Eletrobras assured stakeholders in the same month that it will commission 535MW of wind split into five projects in Rio Grande del Sul, Rio Grande do Norte and Bahia. Spanish utility Iberdrola is building grid infrastructure to connect 288MW, from the August 2010 auction, across Rio Grande do Norte and Bahia.
In Mexico, indigenous local protests in Oaxaca are still holding up construction. But Mexican development is finally moving outside Oaxaca.
Turbine agreements were signed for projects in Nuevo Leon and Tamaulipas. Two projects totalling 170MW are being developed in Jalisco. In Baja California, US utility Sempra Energy is developing 156MW with a power purchase agreement in the US state of California, and local developer Geomex claims land rights for an 870MW project.
Beyond the big two
Some major projects are progressing in Chile, albeit with the help of international finance to compensate for a lack of regulatory support. Italian utility Enel is financing its 90MW Talinay Oriente project with a 12-year EUR 110 million deal with Denmark's Export Credit Agency. Chinese manufacturer Goldwind is providing finance for Irish client Mainstream Renewable Power to develop more than 400MW in Chile. Wind development in other parts of Latin America remains piecemeal.