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United States

Growth only tells half the story

The American Wind Energy Association is proclaiming 2012 as wind's "best year ever". On the face of it, the figures are impressive.

Installations of over 13GW meant that, for the first time, wind ranked number one for new generating capacity. Ten gigawatts was installed in just five months - it took 25 years to reach the first 10GW of wind on US power systems.

But last year's build rate should not be judged in isolation, having been driven by the end-of-year deadline for the industry's main incentive, the production tax credit (PTC), and the fear that it would not be extended.

The supply chain was devastated. Some 4,500 manufacturing jobs were lost and five major manufacturing plants closed. Installations this year are predicted to plummet to 2-3GW, followed by 5-8GW next year as the market rebalances.

These figures are backed up by data from Windpower Monthly's sister product, Windpower Intelligence (WPI), which shows big drops in mid-stream development activity such as permitting approvals and construction starts.

Welcome arrivals

However, as our US focus shows (from page 33), hope is now on the horizon. A spate of pension and infrastructure funds have been buying projects at the end of their PTC lifetime, attracted by a sector they see as forward-looking with steady returns. This is raising vital cash for developers to redirect to new projects.

This trend for non-traditional buyers in wind is not limited to projects coming out of their PTC timeframe. AWEA notes that industrial buyers, schools/universities and towns or cities bought into wind in 2012. Major retailer Walmart's plan to produce or procure 7 billion kilowatt hours of renewable energy every year is a telling sign of the private sector's confidence in wind.

Grid bottlenecks are easing. While 136GW wind is currently queuing for interconnection, this is a decrease from over 300GW in 2009. This is a sign that interconnection queue reforms imposing stricter requirements to eliminate projects with low probability of proceeding to development are working.

Meanwhile, a new source of projects may open up as Native Americans make tentative steps towards realising the potential of projects on their land, which is typically located in areas with some of the best wind resource in the US.

Again, this is reflected in WPI's data, which shows that the reductions in mid-stream activity have been offset by new project announcements, site acquisitions and permitting starts, while construction completions and commissioning of projects has also increased.

Time to break free

But renewed activity may be short-lived as the PTC may once again be withdrawn in the very near future. The clock is already ticking as developers have until 1 January 2014 to start construction to be eligible.

Manufacturers that have weathered the storm have done so by innovating and diversifying. Criticism that chasing the PTC has distracted attention from making products more efficient has come even from within the industry.

As calls for a PTC phase-out from both industry players and politicians gain momentum, it may at last be time for the wind industry to get off the rollercoaster in favour of more stable footing.

Catherine Early is associate editor of Windpower Monthly

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