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Wind Energy Outlook 2012: An Uncertain Forecast

Onshore wind power is in a good place, at least through the end of 2012. Wind power has made up 35 percent of all new generating capacity added to the U.S. grid since 2007. That's twice what coal and nuclear combined have added in the last five years, according to the American Wind Energy Association (AWEA). And as U.S. developers take advantage of federal tax credits for renewables through the end of 2012, it's possible that 2012 may result in the largest number of wind projects completed in one year.

As of the end of the third quarter of 2011, 8,400 megawatts (MW) of wind power capacity are under construction in U.S. and installed wind power capacity stands at 3,360 MW. This exceeds installations up to the same point in 2010 by 75 percent.

Duke Energy has recently positioned itself as a leader in terms of new wind developments. Since 2007, the company has invested more than $1.75 billion to build its fleet of 10 wind farms across the country. Just this year, Duke announced nearly 800 MW of new wind projects. In 2012, Duke plans to put an additional 770 MW of wind power into operation, according to Duke Energy Renewables President Greg Wolf.

Amongst Duke's recent undertakings is a 402-MW wind farm in Willacy County in West Texas. The Los Vientos I and II wind power projects are both expected to be online by the end of 2012. In addition to the Los Vientos wind power projects, Duke Energy Renewables announced four other new wind farms in 2011:

  • The 168-MW Ironwood wind power project in Ford County, Kan.
  • The 131-MW Cimarron II wind power project in Gray County, Kan.
  • The 69-MW Laurel Hill wind power project in Lycoming County, Penn.
  • The 20-MW Shirley wind power project in Glenmore, Wis., which is already in operation.

One of North America's top producers of renewable energy, NextEra Energy, announced plans this year to build the 200-MW Limon I Wind Energy Center near Limon, Colo. The project will use GE 1.6-MW turbines. Construction is expected to begin in the spring of 2012 and the project is slated to be operational by the end of 2012. NextEra could also build a second project, Limon II, at the same location. If approved, Limon II (also expected to come in at 200 MW) would be operational by the end of 2012.

Many wind projects were under the gun to begin construction under the temporary umbrella of the 1603 Treasury Grant Program, so it can be expected that 2012 will be a year of thousands of wind power MW being added to the U.S. electric grid. Under the 1603 program, a project must commence construction by Dec. 31, 2011 in order to qualify for the 30 percent grant in lieu of investment tax credit (ITC).

While Section 1603 will likely expire at year-end, the federal renewable energy production tax credit (PTC) will be a draw for wind developers starting construction in 2012. Under present law, the PTC provides an income tax credit of 2.2 cents/kWh for the production of electricity from utility-scale wind turbines. The PTC is set to expire on Dec. 31, 2012.

One of the many new builds taking advantage of the PTC is the 63-MW Kingdom Community Wind project being constructed in Lowell, Vt.

"This is a $156 million project," said Kingdom Wind spokeswoman Dorothy Schnure. "Provided the project is in service by the end of 2012, we will receive $44 million for the PTC."

The project, which commenced construction on Sept. 1, is being built along a three-mile portion of the Lowell Mountain range in Orleans County. The project will use 20 to 21 Vestas wind turbines.

DTE Energy also plans to take advantage of the PTC. Its $225 million project made up of three wind farms will use 1.6-MW GE turbines and have total a capacity of 110 MW. The Minden, Sigel and McKinley wind farms will be located on nearly 15,000 acres in eastern Michigan. Construction on the project will begin and be completed in 2012.

DTE Energy expects to add about 1,000 MW of renewable power, or about 10 percent of its sales, by 2015. Scott Simons, spokesman for DTE Energy, said the majority of that renewable energy - all but about 20 MW - will come from wind.

The long-term future of onshore wind power may be foggy, but 2012 will be a time for several wind projects to be completed and commenced. Developers will continue to reap the benefits of the PTC for projects commenced by the end of 2012. While AWEA is pushing for a four-year extension of the PTC, Elizabeth Salerno, director of industry data and analysis for AWEA, said wind developments post-2012 have a "question mark over them" for the time being due to the lack of long-term federal policy.


By the end of 2011, it's expected that Canada will have installed 1,338 MW of new wind power capacity. That's remarkable growth when compared with the 690 MW of capacity installed in 2010, according to the Canadian Wind Energy Association (CanWEA). The installations for 2011 are expected to bring $3.4 billion in investments for the year.

Ontario is slated to lead all provinces in new installed wind with 500 MW of capacity by year end. Seven other provinces, including British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick and Nova Scotia, all have projects being commissioned by the end of 2011.

In total, Canada is projected to have more than 5,300 MW of total installed wind capacity by the end of 2011. More than 6,000 MW of wind energy projects have contracts to be built over the next five years.

"Canada, and in particular Ontario, is emerging as a very competitive destination for wind energy investment globally," said Robert Hornung, president of CanWEA.


Canada has experienced challenges with offshore wind projects recently. Trillium Power filed a lawsuit in September against the provincial government of Ontario, claiming that it unfairly cancelled all offshore wind projects. In February, the province put a moratorium on all offshore projects, saying it needs to do further studies about possible health effects.

Before the plug was pulled on offshore developments, Trillium had already spent about $5.3 million on its estimated 600 MW wind farm in Lake Ontario near Kingston. Its future loss of profits, however, added up to $2.25 billion, according to the lawsuit.


Many in the renewable energy industry have considered the U.S. permitting and financial climate to be hostile toward offshore wind developments ever since whispers of developments began in the early 2000s. Since offshore wind is an emerging North American technology, start-up costs are higher than onshore developments. That's why it was less than surprising that project cancellations became fairly common in 2011.


One of the largest cancellations was the nixing of the 150-MW Great Lakes Offshore Wind Project. The decision makers for the project, the New York Power Authority (NYPA) Board of Trustees, said an estimated annual subsidy of between $60 million to $100 million would have resulted in a significant cost premium to NYPA.

In the case of the NYPA project, trustees came to the conclusion that the generating output of the project would have resulted in costs two to four times more than the amount of a land-based wind project.

Cancellations like this leave prospective offshore wind developers in a quandary. Considering the unstable global financial environmental and the likely removal of federal grants for renewables, is now the right time to plan offshore wind projects?

In February, Secretary of the Interior Ken Salazar and Secretary of Energy Steven Chu unveiled a national offshore wind strategy with a goal of the deployment of 10 GW of offshore wind capacity by 2020 and 54 GW by 2030.

The potential value of offshore wind in the U.S. is sizeable. According to the U.S. Department of Energy's (DOE's) National Renewable Energy Laboratory, the 28 U.S. coastal states consume 78 percent of the nation's electricity, but only six of these states could meet even one-fifth of their power demand with land-based wind energy. This leaves a clean energy void that could be filled by offshore wind power.

"We have a very vast and untapped clean energy resource within a short proximity of high demand centers," said Mark Rodgers, spokesman for the Cape Wind project.

Cape Wind, the first fully permitted offshore wind project in the U.S., is one of many developments moving forward in spite of the unsure environment. First proposed in 2001, the project off the coast of Massachusetts has been a slow-moving development. It has taken more than a decade to gain permitting, a commercial lease from the Department of Interior and long-term power purchase agreements (PPA).

Cape Wind now has a PPA for 50 percent of its output, and the project is expected to commence construction in 2012, Rodgers said. Once construction is underway, the project should take two to three years to complete.

In October, a federal appeals court revoked the Federal Aviation Administration's (FAA) determination that the Cape Wind project would not present a flight hazard in Nantucket Sound. Rodgers said that the FAA needs to better explain its Determination of No Hazard, but that after FAA does so, its decision will stand. "We do not foresee any impact on the project's schedule in moving forward."

While the Cape Wind project has been slow-moving, its role as an offshore forerunner may be of great significance to future offshore pioneers. "Cape Wind has greatly contributed toward the nation developing a regulatory framework for offshore projects," Rodgers said.

Upon completion, Cape Wind is expected to produce 170 MW — equivalent to 75 percent of the 230 MW average electricity demand for Cape Cod and the islands of Martha's Vineyard and Nantucket, Rodgers said.

Several other offshore wind projects have been announced and are in working on financing and permits. Neptune Wind has announced plans for a 500-MW offshore wind farm 20 miles off of the Massachusetts and Rhode Island border. The project is still several years in the making. A federal permit could come by 2013, and construction would take five additional years.

In October, Deepwater Wind submitted its plan to the U.S. Department of the Interior to develop a 1,000-MW offshore wind project off the coasts of Rhode Island and Massachusetts. The Deepwater Wind Energy Center is expected to site 200 wind turbines in the waters of southern Rhode Island Sound. Construction is planned for 2014 or 2015, with operation expected by 2016 or 2017.

During the AWEA Offshore Windpower Conference in October, Fishermen's Energy of Cape May, N.J., said it hoped to be the first operating offshore wind venture in the country by breaking ground off Atlantic City before the end of the year. The company plans to install six wind turbines in a demonstration project in state waters. But Cape May is still awaiting approval from the U.S. Army Corps of Engineers. The company's demonstration project would be the forerunner to a second project more than 10 times larger in federal waters.

Although offshore projects may not be moving forward quickly, the realm of offshore wind research is taking off. Earlier this year, the Interior and Energy departments announced $50.5 million in funding opportunities for projects that support offshore wind energy deployment.

Following through on that promise, the DOE awarded a $4.1 million grant to Alstom and three research institutions to research and develop control systems and integrated sensors that increase energy production and lower the capital cost of offshore wind turbines. The research will specifically support the development of a 6-MW offshore wind turbine.

The DOE also awarded AWS Truepower a $900,000 grant to help establish an enhanced offshore wind data network. The tasks associated with the project include an assessment and catalog of national datasets and capabilities and an analysis of gaps in required data and modeling capabilities.

It's likely that 2012 will not usher in the completion of any U.S. offshore wind projects, but it will be a time for permits and additional research.

Lindsay Morris is an associate editor with Power Engineering magazine and a regular contributor to and Renewable Energy World North America magazine.

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