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Market Status: North America

NORTH AMERICA: Wind installations in 2015 and prospects for 2016 in the United States and Canada. Including our unique Feelgood Factor rating based on political support, investor confidence, structural readiness, and pipeline.

Siemens' production facilities in Ontario have made it a dominant player, with a 47% market share in Canada
Siemens' production facilities in Ontario have made it a dominant player, with a 47% market share in Canada

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UNITED STATES
: PTC stability will add to corporate trend
CANADA
: Sector looks west as Ontario slows

 

UNITED STATES: PTC stability will add to corporate trend

Feelgood Factor: 4 (*)
  Plus points: Long uninterrupted stretch of federal support
Minus points: Post election uncertainty, industry ability to ramp up to capture PTC

The US's wind prospects look solid for the next few years thanks to the certainty of the $0.023/kWh production tax credit (PTC), extended until 2019. In addition, California passed an aggressive 50% renewable portfolio standard (RPS) in 2015, expected to boost wind power by 11-21GW by 2030. Likewise, New York's governor unveiled a "50% by 2030" RPS in December.

This year will be a turning point too for the US's much-delayed offshore sector. Deepwater Wind's 30MW Block Island is due to come online in Rhode Island Sound by year-end, the country's first offshore project.

But looming in the background are tumultuous presidential and congressional elections. Prospects for President Barack Obama's Clean Power Plan (CPP) - to boost wind starting in the next decade - could change depending on who wins the race for the White House in November. The leading contenders for the Republican nomination are all climate-change deniers.

In 2015, the US wind industry installed 8.8GW, the third-largest amount ever and 77% more than in 2014. The US now has 74.6GW of installed capacity and more than 52,000 operating turbines. Indeed, last year's new capacity surpassed the 7.3GW of photovoltaic capacity and the 6GW of natural gas added.

Texas, Oklahoma, Kansas and Iowa installed the most capacity in 2015. Texas continued to lead with a cumulative 17.7GW at the end of 2015, more than twice that of any other state. Iowa ranked second with more than 6GW. Oklahoma surpassed 5GW.

According to the Energy Information Administration, wind power comprised 4.7% of the country's electricity supply in 2014, the most recent data available. Most of the US's electricity is generated by coal and natural gas.

Corporate purchasers

In the strongest trend for 2015, Fortune-500 companies continued to buy wind. Non-utility purchasers comprised 75% of the total megawatts contracted in power purchase agreements signed in the final quarter. Companies included General Motors, Google Energy and Procter & Gamble. The trend appears to be long-term.

Last year's policy highlight was Congress's December vote to phase out the $0.023/kWh production tax credit (PTC) and the 30% investment tax credit (ITC) over five years, the longest uninterrupted stretch with federal incentives since the PTC first expired in 1998. The new policy extends the PTC and ITC at the current level for projects starting build in 2015 and 2016. The credits drop to 80% in 2017, 60% in 2018, and 40% in 2019 with final projects online in 2021.

Key players in 2015 included Warren Buffet's Mid-American Energy, which in December completed the 495MW Highland project, the final part of its 1.1GW Wind VIII development in Iowa.

But it was Apex Clean Energy that led developers, with more than 1GW of new wind facilities installed in 2015, or 12% of all wind added. Apex has 12.3GW in its portfolio expected to come online by 2020, not including greenfield and acquisition sites.

SunEdison bought the most projects in 2015, with 1.3GW. For $2 billion, it bought 930MW of wind projects from Invenergy, the US's largest independent wind owner.

GE Energy, Vestas, and Siemens accounted for 88% of turbines installed in 2015. GE Energy saw 3.5GW come online, and Vestas 2.8GW. But of the projects under construction as of January 2016 with an announced supplier, Vestas had 2.6GW to GE's 2.2GW.

For the next few years, the future is relatively stable. As of January, 9.4GW was under construction, with another 4.9GW in advanced stages of development, according to the American Wind Energy Association. The job for the industry is to get development cycles going in time to capture the PTC before it goes.

Even though the US Supreme Court in February temporarily blocked Obama's plan to regulate emissions from coal-fired power plants under the CPP while a federal appeals court considers a challenge from 29 states, utilities say they are continuing to close down coal plants and move to cleaner energy. If the CPP is implemented, by 2030 renewables should account for 28% of America's electricity generating capacity.

Make Consulting forecasts 8.4GW, 7GW and 10.5GW of new capacity in 2016, 2017 and 2018 respectively. Bloomberg New Energy Finance (BNEF) expects 9.7GW, 7.7GW and 11.6GW from 2016-8. Further ahead, Make foresees 64GW by 2025, 53% within the first four years because of the PTC. BNEF projects 41GW by 2020.

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CANADA: Sector looks west as Ontario slows

Feelgood factor: 3
Plus points:
Alberta and Saskatechewan phasing out of coal
Minus points:
Ontario's commitment to nuclear

Canada is expected to install at least 1GW in new wind-energy capacity in 2016, but even as the industry builds its way through a backlog of contracted projects in Ontario and Quebec, it is looking west for new growth opportunities after the coal-dominated provinces of Alberta and Saskatchewan announced late last year that wind energy would be central to their carbon-reduction plans.

The country's total installed capacity now stands at 11.2GW after the industry connected 1,545MW in 2015, its third-biggest year for new additions. Ontario led the country with 871MW, followed by Quebec with 397MW. Nova Scotia added 18 projects last year, most of them contracted under its community feed-in tariff scheme.

Wind now supplies about 5% of Canada's electricity demand, part of a largely low-carbon supply mix that also includes around 60% hydro and 15% nuclear.

EDF EN Canada completed the second phase of Canada's largest wind facility, the 350MW Riviere-du-Moulin project, in 2015 and also installed the 74MW Mont-Rothery wind farm to consolidate its leading position in the Quebec market. Pattern Energy and Samsung led the way in Ontario, partnering to bring the 180MW Armow project online and working with Capital Power to complete the 270MW K2 facility.

Six manufacturers supplied the Canadian market last year. Siemens, whose manufacturing presence in Ontario has made it a dominant player in the province, led with a 47% market share.

Changing focus

Low demand growth, plans for new large-scale hydro developments, and a commitment to nuclear refurbishment in Ontario have challenged the long-term market for wind in Canada, but bright spots emerged in 2015. Alberta's decision to phase out coal generation and Saskatchewan's plan to have renewable-energy sources make up 50% of its generating fleet, both by 2030, are expected to drive thousands of new megawatts of wind purchases.

There is also hope the federal government will become re-engaged in the renewable energy policy discussion after the defeat of the fossil-focused Conservatives in October's national elections.

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* Feelgood Factor rating: Based on political support, investor confidence, structural preparedness and projects in the pipeline. Created in association with Dentons global law firm

Written by: Diane Bailey and Ros Davidson

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