Massachusetts, United States — Following a record-breaking year of capacity additions in 2009—with 9.8 GW of wind projects installed—the U.S. wind market finds itself confronting a growth-constrained 2010 and a near-term market landscape wrought with increased competition, according to a new market study, U.S. Wind Power Markets and Strategies: 2010-2025 from IHS Emerging Energy Research.
However, with the proliferation of favorable state and federal policies, the U.S. wind industry is on track to add more than 165 GW of new capacity through 2025, resulting in a total installed base of 200 GW, according to the study’s projections. The study forecasts anywhere from 6.3-7.1 GW of wind could be installed in 2010, 40-60 percent lower than 2009 installations.
To put this growth figure in context, the industry has experienced three straight years of record or near record growth. In 2007 the U.S. installed 5244 MW and in 2008 the industry stepped up again, installing an addition 8300 MW, followed by the new record in 2009 of 9800 MW. To some extent growth was bound to slow. But what seems to be the most surprising is that there will be a drop in installs for the first time rather than simply a slowing of growth.
“2010 marks the first time since 2004 that the US wind industry will not surpass the previous year’s growth level. Despite unprecedented federal wind incentives, reverberations from the financial crisis continue to create a difficult near-term market landscape especially in light of continued energy policy uncertainty. However, the US wind market is poised to emerge from this near-term uncertainty with a clearer path toward strong future growth,” said Matthew Kaplan, an IHS senior analyst and one of the study’s authors.
Another factor playing into the wind decline in early 2010 is the drop in overall electricity consumption taking place in the U.S. over the last 2 years. This has led utilities to look for less new capacity, including wind.
“The unprecedented decline in power demand and electricity and natural gas prices has had a profound effect on utility willingness to ink power purchase agreements,” Kaplan said. “Despite large build years in 2009, leading independent power producers EDP Horizon and NextEra Energy Resources have slashed wind build expectations exemplifying near-term challenges.”
The long-term growth prospects for the industry however look good. The U.S. wind industry will represent US $330 billion in investments between 2010 and 2025, with more than 90 percent stemming from onshore wind, according to the study’s projections. The Midwest, Great Plains and Rocky Mountain states will act as major wind export hubs to areas with large appetites for renewables, including California, the Mid-Atlantic and the South.
While the U.S. is closer than ever to tapping into its enormous offshore potential with the expected completion of the Cape Wind project in 2013, offshore is expected to account for only 5 percent of total U.S. wind build in 2025.
Kaplan spoke to RenewableEnergyWorld.com’s Stephen Lacey at Windpower 2010 this week in Dallas about the report and said that while the short-term forecast looks somewhat bleak, the macro-drivers for wind, including job growth, national security, climate change and international competition, are highly embedded in the rhetoric around renewables and are creating a competition among states to attract wind development activity. When the economy turns back around and demand for electricity increases, the demand for wind will again increase, according to Kaplan.
Click here to for more information about the IHS study U.S. Wind Power Markets and Strategies: 2010-2025.