While project development activity is now picking up following the extension of the production tax credit (PTC), the market still has more nacelle assembly capacity than it is likely to need over the near term.
Manufacturing and supply-chain-related employment dropped from 30,000 to 25,500 in 2012, says the American Wind Energy Association's (AWEA) newly released annual report.
At the same time, overall employment in the sector increased from 75,000 jobs at the end of 2011 to 80,700 in 2012.
AWEA's senior policy analyst Emily Williams attributed the increase to a strong construction year that saw wind trump natural gas as the largest source of new power in the US with 13.13GW installed.
"We did see contraction in some areas, but as the US wind industry had its best year ever, these were made up for in areas like construction," Williams said.
Among the five major wind-related manufacturing facilities that closed last year were two nacelle assembly plants, leaving 12 still in operation with more than 13GW of capacity. But market analysts have predicted only 2-3GW of new wind build in the US this year and 5-8GW next year, while a recent report from Make Consulting suggests enough demand exists in North America to support an average build of more than 6GW per year to 2020.
The 13 blade factories in the US have the capability to produce more than 12,500 individual blades annually, AWEA says. On the tower side, the closure of two factories and the decision by six more to cease supplying the wind industry has left 12 facilities capable of producing about 3,800 towers a year.
"This diminished capability signifies a potential supply chain bottleneck in the near-term," the annual report says.
Delays in getting renewal of the $0.023/kWh production tax credit (PTC) also affected wind energy buyers. AWEA's analysis found "minimal activity" in 2012 when it came to finalising power offtake agreements for future projects. With the PTC now in place for projects that start construction this year, that is changing, Williams said. At least seven utilities have issued requests for proposals for more than 1GW of wind.
Developers are also moving projects forward without power purchase agreements (PPAs), entering into 10- and 15-year fixed price hedge agreements with big investment banks.
"It is one of the new developments that we've seen over that last couple of months," John Eber, managing director at JP Morgan, told the recent AWEA-sponsored Chicago Leadership Forum.
"When we have essentially a short period of time in which we are trying to build wind farms, to be able to execute a power hedge in lieu of a PPA is definitely making some of these wind farms happen that might not otherwise."
Only about 15% of projects built in 2012 did not have some form of long-term offtake agreement, says AWEA.
GE was the top turbine provider in the US in 2012 with just over 5GW installed, followed by Siemens with 2.64GW and Vestas with 1.8 GW. Florida-based Nextera was the leading developer with 1.5GW installed. Iberdrola was next with 716GW added, and EDF Renewable Energy third with 658GW.