New projects brought US wind power generating capacity to 35.2GW, the highest total of any country. But last year's business and much of this year's is built on the legacies of better days, and despite strong installation numbers, the US wind market heading into 2010 is starkly different and more precarious than in the boom days of 2007 and 2008.
"There hasn't been much new activity since the financial crisis; it's really been about trying to land the backlog of commitments that have already been made," says Vic Abate, president of GE Energy's wind division, which provided nearly 40% of the turbines installed in the US last year (see chart, page 42). Orders at the end of 2008 and all through 2009 have been scarce, says Abate. GE's recent $1.4 billion contract to deliver 338 of its new 2.5MW turbines in Oregon is a rare exception.
Over several months in late 2008 and early 2009, the American Wind Energy Association (AWEA) warned of stagnating growth, but the volume of megawatts installed proved otherwise. Discarding around 300MW that properly belong in the end-year tally for 2008, close to 9.5GW came online in the US in 2009, about 870MW more than in 2008.
This was partly down to the $787 billion economic stimulus package passed by Congress in early 2009, which contained a 30% cash subsidy for the installed cost of a wind plant. Previously, the subsidy was in the form of a production tax credit (PTC), which typically required complicated shared-equity partnerships with big banks. The PTC is still an option until 2012, but a lack of eager banks has rendered it much less useful.
Installations last year would likely have been much lower had the US government not stepped in. Major project developer Iberdrola says it would have halved its US build in 2009 without the grants. But, with over $550 million in cash grants, it installed around 1.2GW in 2009.
So helpful has the grant programme been that this year AWEA and major independent power producers have already begun to lobby Congress to extend the grants beyond their 2010 deadline.
As the law stands now, developers hoping to qualify for the grant must begin construction on a wind project before the end of this year, spending at least 5% of total expected final cost. That allows the developer to use 2011 and 2012 to finish construction. The wind market would like to see both the construction start and the finish deadlines extended, but Congress may not have the appetite or the unity to meet the industry's needs amid an increasingly rancorous political climate.
With the deadline in mind, some developers are expected to begin construction infrastructure on secured wind sites in order to reach the 5% threshold before the end of the year, even if they cannot immediately finance further build work. This would still leave two years for construction to finish, assuming no extension is granted.
"Toward the end of the year, we're going to see a big construction push for projects to take advantage of the grant programme," says Matthew Kaplan, an analyst with Emerging Energy Research. "We'll see a very large uptick, potentially for the manufacturers as well, due to that."
Renewable electricity standard
Whether or not the cash grant programme is extended, there is broad consensus that a federal renewable electricity standard (RES), mandating a minimum proportion of renewables in the supply mix, needs to be put in place to take wind off temporary or start-stop measures - be they grants or tax credits. Around 60% of US states already have such a policy in place at the state level.
"Until we get beyond the stimulus bill policy and into a long-term energy policy that has a RES as the federal standard, (the wind market) will continue to be a challenge," says Abate.
Less certain, however, is how the US market moves from short-term cash or tax credit policies to an RES policy, if lawmakers pass one. All the business models in the current US market assume either the grant or the tax credit.
"You couldn't overnight say the PTC is off, go to an RES. It would be a massive destruction," says Abate. "So you have to have some plan that gets us into a long-term energy strategy, that says the country is going here - lets say 20% wind by year 2020 - these are the laws that will be passed, the mechanisms used, it will work like this, and everyone can plan for it in a very systematic and competitive way."
Much is at stake in getting the transition right, says Abate, for his and other companies that invested vast sums building up the market. GE has invested over a billion dollars since it entered the sector in 2002 with the purchase of Enron Wind. "The whole industry has scaled up," says Abate. "Everybody in it now is bigger and I think the country is ready, it has the capacity and the wherewithal to build the next generation power technology. We just need the leadership of the country to say, let's go."
Irrespective of policies like the cash grant, the PTC or even the possible transition to an RES, there are some fundamentals to today's changed market that are having a cooling effect. "The stimulus package is certainly helping ease the economic situation for the wind industry, however some results in the economy, such as the fall in power prices, have impacted on projects," says Kaplan. "There are still difficulties with developers securing power purchase agreements from the utilities. The utilities are questioning, with power demand down in this economy, why to procure more power right now."
In years past, some wind developers have gone without power purchase agreements (PPA) contracts, instead selling into wholesale markets with fluctuating power prices. But in an era of tighter credit, those deals have all but evaporated, making it necessary for developers to arrange PPA deals. Some owners of recently installed wind stations are vulnerable to market prices and have joined a crowded field looking for limited PPAs.
Service and turbines
One profound shift in the wind market already noticeable towards the end of 2009 is that manufacturers are providing more operations and maintenance (O&M) service and over longer periods. As the original designers, turbine makers have long argued they are best placed to service turbines. Historically, O&M contracts from turbine vendors have often been for short initial durations.
But as turbine vendors pull in less cash from markedly fewer turbine sales, many are moving more deliberately into providing O&M services as an added profit cushion. Developers are also asking for longer service contracts - some because they are playing their stronger hand in a buyer's market to win concessions along with delivery, others because banks are demanding more favourable terms as a condition of lending or providing equity.
Adding to the buyer's market is the availability of a broader range of turbines. In 2008 there were ten turbine types installed, totalling 8.3GW. This year, there were 13 turbine brands with new units slicing up the market pie from Nordex, Nedwind, Dewind and Goldwind - the first Chinese turbines to be installed in the US.
Market shares for new installations shifted to reflect the broadening mix. GE Energy remains dominant but saw its 2008 market share of 45.8% fall to 39.7%. Denmark's Vestas increased its share from 12.3% to 14.7%, Germany's Siemens notched up from 9.5% to 12.2%, while Mitsubishi stepped slightly ahead of Suzlon for fourth place. Germany's Repower saw the quickest yearly growth by installing 322MW, up from 102MW in 2008.
The big question in 2010 is whether the new orders will be enough to carry the industry forward. "2010 is very much going to have a post-recession feel," says Kaplan. "The first half of the year, the industry will look to regain its footing in terms of the (original equipment manufacturers) getting new orders, developers looking for financing for the projects. I think the market is still improving and will very much be improving through the first half of the year."
States in the US with over 1.8GW in 2009
STATE/PROJECT OWNER SUPPLIER MW
Texas Total: 9,409.7 New: 1,971.9
Gulf Wind Babcock & Brown Mitsubishi 283.2
Pyron (Roscoe III) E.on GE 249.0
Penescal Iberdrola Mitsubishi 201.6
Panther Creek III E.on GE 199.5
Inadale (Roscoe IV) E.on Mitsubishi 197.0
Papalote Creek E.on Vestas 179.9
Langford Padoma GE 150.0
Barton Chapel Wind Iberdrola Gamesa 120
South Trent Mesa Babcock & Brown Siemens 101.2
Majestic Babcock & Brown GE 79.5
Goat Mountain II Cielo/Edison Mitsubishi 69.6
Notrees 1B Duke Energy GE 60.0
Sunray II Valero GE 39.0
Sunray I Valero GE 10.5
JD Wind 11 DWS/John Deere* Suzlon 10.0
JD Wind 7 DWS/John Deere Suzlon 10.0
JD Wind 8 DWS/John Deere Suzlon 10.0
Notrees 1C Duke Energy Vestas 1.9
Iowa Total: 3,668.7 New: 878.8
Whispering Willow Alliant Energy Vestas 199.7
Barton Iberdrola Gamesa 160.0
Story County II NextEra Energy GE 150.0
Lost Lakes Horizon Wind Energy Vestas 100.7
Cane Creek Enxco GE 99.0
Pioneer Prairie II Horizon Wind Vestas 71.0
Crystal Lake II NextEra Energy GE 66.0
Iowa Lakes Iowa Lakes GE 10.5
Lakota Wind Electric Co-op
Iowa Lake Superior Iowa Lakes GE 10.5
Crystal Lake NextEra Energy Clipper 10.0
Osage Utilities Osage Utilities GE 1.5
California Total: 2,797.03 New: 274.5
Shilo II Enxco Repower 150
Pine Tree LADWP GE 120
Garnet Azusa Light & Water Nedwind 4.5
Washington Total: 1,980.48 New: 533.7
Windy Point II Cannon Power Siemens 202.4
Windy Point I Cannon/Tuolumne Siemens 96.6
(Siemens section) Wind Project Auth.
Harvest Wind Farm Cowlitz PUD, Lakeview Siemens 98.9
Peninsula Light, &
Eugene Water and
Windy Flats IIA Cannon Power Group Siemens 59.8
Wild Horse II Puget Sound Energy Vestas 44.0
Windy Point I Cannon/Tuolumne Repower 32.0
(Repower section) Wind Project Authority
Minnesota Total: 1,812.17 New: 60.0
Moraine II Iberdrola GE 49.5
Hilltop Power Southwest Wind n/a 2.0
Willmar Willmar Municipal Dewind 4.0
Uilk Tian Run USA Goldwind 4.5
States with more than 1.1GW of capacity in 2009
STATE/PROJECT OWNER SUPPLIER MW
Oregon Total: 1,758.1 New: 691.0
Hay Canyon Iberdrola Suzlon 100.8
Pebble Springs Iberdrola Suzlon 98.7
Wheatfield Horizon Wind Energy Suzlon 96.6
Willow Creek Invenergy GE 72.0
Bigelow Canyon II Portland Gen. Electric Siemens 149.5
Echo 1-7 John Deere Wind Vestas 44.6
Threemile Canyon John Deere Wind Vestas 9.9
Echo 8-9 John Deere Wind Repower 20.0
Vancycle II NextEra Energy Siemens 98.9
Illinois Total: 1,546.5 New: 631.5
Lee/DeKalb NextEra Energy GE 217.5
EcoGrove Acciona Energy Acciona 100.5
Rail Splitter Horizon GE 100.5
Top Crop Horizon GE 102.0
Grand Ridge III/IV Invenergy GE 60.0
Grand Ridge II Invenergy GE 51.0
New York Total: 1274.3 New: 442.5
High Sheldon Invenergy GE 112.5
Noble Altona Noble Env.Power GE 97.5
Noble Wethersfield Noble Env. Power GE 126.0
Noble Chateaugay Noble Env. Power GE 106.5
Colorado Total: 1,245.8 New: 178.1
NCWE* NextEra Energy Siemens 151.8
NCWE* NextEra Energy GE 22.5
NREL research NREL Siemens 2.3
NREL research NREL GE 1.5
North Dakota Total: 1202.5 New: 488.1
Rugby Iberdrola Suzlon 149.1
Prairie Winds ND I Basin Electric GE 115.5
Ashtabula II NextEra Energy GE 67.5
Luverne NextEra Energy GE 49.5
Wilton Wind NextEra Energy GE 49.5
Energy Center II
Ashtabula II NextEra Energy GE 52.5
Prairie Winds Basin Electric GE 4.5
Minot Wind 2
Oklahoma Total: 1,130 New: 299.1
OU Spirit CPV/OG&E Siemens 101.2
Blue Canyon V Horizon GE 99.0
Elk City NextEra Energy Siemens 98.9
* North-eastern Colorado Wind Energy Center.
Active states with 1.1GW or less in 2009
STATE/PROJECT OWNER SUPPLIER MW
Wyoming Total: 1,100 New: 425.0
Campbell Hill Duke Energy GE 99.0
Casper Wind Farm Chevron Global Power GE 16.5
High Plains PacifiCorp GE 99.0
McFadden Ridge Pacificorp GE 28.5
Silver Sage Duke Energy Suzlon 42.0
Airforce US Airforce Gamesa 2.0
Glenrock III PacifiCorp GE 39.0
Rolling Hills PacifiCorp GE 99.0
Indiana Total: 1,036.0 New: 905.5
Fowler Ridge I BP Clipper 100.0
Fowler Ridge I BP Vestas 300.3
Meadow Lake Horizon Wind Energy Vestas 199.7
Hoosier Enxco Repower 106.0
Fowler Ridge II BP GE 199.5
Kansas Total: 1,013.5 New: 199.0
Central Plains Westar Energy Vestas 99.0
Flat Ridge I BP/Westar Energy Clipper 100.0
Pennsylvania Total: 748.2 New: 387.5
Locust Ridge II Iberdrola Gamesa 102.0
Armenia Mountain AES GE 100.5
Highland Wind Project EverPower Ren. Nordex 62.5
Stony Creek E.On GE 52.5
North Allegheny Duke Energy Gamesa 70.0
New Mexico Total: 597.5 New: 100.0
High Lonesome Edison Mission Clipper 100.0
Wisconsin Total: 448.9 New: 54.0
Butler Ridge Babcock & Brown GE 54.0
Montana Total: 375.0 New: 103.5
Glacier Wind II NaturEner Acciona 103.5
South Dakota Total: 313.2 New: 126.4
Wessington Springs Babcock & Brown GE 51.0
Buffalo Ridge I Iberdrola Suzlon 50.4
Titan BP/Clipper Clipper 25.0
Missouri Total: 308.5 New: 146.0
Farmer's City Iberdrola Gamesa 146
Utah Total: 223.29 New: 203.5
Milford Wind Corridor First Wind Clipper 145.0
Milford Wind Corridor First Wind GE 58.5
Maine Total: 174.2 New: 127.6
Kibby Mountain I TransCanada Vestas 66.0
Stetson Wind First Wind GE 57.0
Presque Isle Presque Isle n/a 0.1
Fox Island Fox Island Electric GE 4.5
Nebraska Total: 151.88 New: 80.0
Elkhorn Ridge Edison Mission Vestas 80.0
Idaho Total: 146.7 New: 71.4
Mountain Home John Deere Wind Suzlon 42.0
Cassia John Deere Wind Suzlon 29.4
Michigan Total: 143.4 New: 14.0
Stoney Corners Heritage Sustainable Repower 14.0
Arizona Total: 63.0 New: 63.0
Dry Lake Iberdrola Suzlon 63.0
Massachusetts Total: 15.22 New: 9.2
11 sub-2MW projects Various Various 9.2
Alaska Total: 7.8 New: 4.5
Kodiak Island Kodiak GE 4.5