Friday, August 2, 2013

US wind industry poised for robust recovery

Trade body reports almost 5GW of capacity in the pipeline after policy uncertainty put the brakes on the market during the first half of the year
The US wind energy industry is poised for a dramatic recovery over the next 12 months, despite the market grinding to a standstill during the first half of this year.

New figures released this week by the American Wind Energy Association (AWEA) confirm that the high profile row in Congress at the end of 2012 over whether or not to extend the Production Tax Credit (PTC) had a chilling effect on the market.

In the end an 11th hour deal was brokered that saw the PTC extended, but not before developers had rushed to meet the assumed end of year deadline for the incentive, leaving the development pipeline empty. As a result, only 1.6MW of new wind energy capacity was commissioned during the first half of the year with no projects completed during the second quarter.

However, the AWEA's Second Quarter 2013 Market Report also revealed that the pipeline for new projects has now recovered strongly with more than 20 requests for proposals (RFPs) issued for new projects during the three month period.

The trade association said that 1.3GW of new wind energy capacity is now under construction with more than 3.6GW of power purchase agreements secured for new projects. Moreover, utilities have announced plans for nearly 5GW of new capacity during the first six months of the year.

AWEA chief executive Tom Kiernan said that the row over the future of the PTC had resulted in a boom and bust market that was undermining the development of an increasingly cost effective form of energy.

"The market pattern playing out in US wind energy right now tracks exactly with warnings sounded by the industry a year ago, and with studies that examined the consequences of not extending the PTC," he said in a statement. "No industry can contribute what it's capable of giving America without stable policy, and wind energy is Exhibit A of that reality. The industry is hard at work getting geared up to meet the strong demand for more wind energy, but if it's going to generate more jobs and clean energy for America in the future, it simply must have the same kind of policy certainty under which other industries operate."

The report also provided further evidence that growing numbers of utilities are favouring wind energy developments as a cost effective form of energy.

For example, the AWEA cited comments from Riley Hill, president and chief executive of Southwestern Public Service Company, who said the company now regarded some wind farms as cost competitive with conventional forms of power.

"The price per megawatt-hour of energy generated at these wind facilities will be less than the per-megawatt-hour price of most of the company's natural gas-fueled generation," he said, adding that over the 20-year terms of the company's wind energy PPAs it expected to save $590.4m in fuel costs.

"What we are seeing now," said AWEA's Kiernan, "is a testament to the willingness of utilities to sign long-term contracts for wind energy offered at competitive prices."

Syndicated from Business Green

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