Wind Energy Outlook 2012: An Uncertain Forecast

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.

CANADA

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.

OFFSHORE WIND IN CANADA

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.

OUTLOOK 2012 OFFSHORE WIND — AN ERA OF RESEARCH

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.