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United States

United States

United States - Emerging from bust cycle once more

UNITED STATES: The US's prospects for 2014 look good. The wind market is back in the growth phase of its rollercoaster response to decades of federal policy uncertainty.

Grid boost… New transmission lines in Texas will help growth (pic: Mike Fisher)
Grid boost… New transmission lines in Texas will help growth (pic: Mike Fisher)
Installations in 2014 may reach 6.5GW, and 8.5GW in 2015, says Bloomberg New Energy Finance (BNEF). Make Consulting estimates 13GW for 2014-5.

The production tax credit (PTC), worth $0.023/kWh, is causing the mini boom. Projects that started construction in 2013, and which start operating by year-end 2015, should all qualify.

All this activity stands in stark contrast to last year, which was the slowest for wind since 2004. While Windpower Intelligence project-by-project figures report 1.9GW, the American Wind Energy Association so far records even less activity, with just over 1GW added — discrepancies possibly due to commissioning dates. To blame was the PTC's lapse at the end of 2012, its reinstatement a few days later, then its expiration in December 2013 for the fifth time since 1992. Developers were forced to put their plans on hold and manufacturing orders evaporated.

On the plus side, 2013 saw Google, Facebook and Microsoft unveil purchases of wind power for US data centres. Warren Buffett's MidAmerican Energy revealed a 1GW order of Siemens wind turbines for five Iowa projects to start running in 2015, in time to qualify for the PTC. And in Texas, the final competitive renewable energy zones (CREZ) transmission lines were completed on schedule, in December. They should deliver 18GW of wind.

Additions

The year's largest new project was the 250MW Buffalo Dunes wind farm in Kansas, developed by TradeWind Energy and owned by GE Energy Financial Services and Enel Green Power NA. Next in size was the Goldthwaite project in Texas, a 141MW merchant plant developed and owned by Invenergy. Terra-Gen Power finished its 137MW Alta X in California, the latest addition to the vast 1.5GW Alta Wind Energy Centre, whose investors include Google and MidAmerican. And in Michigan, NextEra Energy Resources brought the 100MW Tuscola II wind farm online.

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All this is modest compared with the record 13.1GW of installations in 2012, when developers and electricity buyers took advantage of the lower cost of wind energy — a drop of 43% in just four years — while rushing to lock in projects' eligibility for the PTC. In 2011 and 2010, 6.8GW and 5.1GW respectively was installed.

Policy uncertainty continues

The US remains the only mature, major wind market without a coherent, stable national renewables policy. America's future development, in the shorter term, will depend on reviving the PTC or on a new policy tool. Without it, BNEF expects US installations in 2016-2020 to drop to between 2.5GW and 3.9GW yearly.

Tax equity money is in somewhat short supply because of the PTC uncertainty, says Ed Zaelke, co-chair of law firm Akin Gump's global project-finance practice. Availability of wind turbines is also a bottleneck, similarly because of the rollercoaster market. Some smaller developers, he predicts, will be unable to secure the turbines they want at the right price in 2014, and will have to cancel projects even with PPAs. Make Consulting also cites the number of projects under construction without a long-term off-take agreement, as well as volatility in the hedge market.

Current political backdrop Congress is gridlocked, hampering new pro-wind policy; stop-start federal incentive

High point of 2013 Final $6.8 billon in CREZ transmission lines completed in Texas; could help deliver 18GW of wind

Low point Eligibility expired for wind's key policy tool, the production tax credit, on 31 December

Key influencer Billionaire investor Warren Buffett; in December, his MidAmerican Energy ordered $1 billion in wind turbines, the world's largest order ever

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