NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC. Summary of trends in the U.S. wind energy market THE COST AND VALUE OF WIND ENERGY Aaron Smith 26 May, 2014
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NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.
Summary of trends in the U.S. wind energy market
THE COST AND VALUE OF WIND ENERGY
Aaron Smith
26 May, 2014
2 DOE/NREL Internal Use Only - Do Not Cite or Distribute
Objectives
1. Introduction to the US wind market
2. Land-based wind a. Market context
b. Cost trends
c. Technology and performance trends
d. Cost and pricing
3. Offshore wind in the United States a) Market context
b) Cost trends
c) Outlook
3 DOE/NREL Internal Use Only - Do Not Cite or Distribute
Disclaimer
WIND AND WATER POWER PROGRAM
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2013 Wind Technologies Market Report
Purpose, Scope, and Data:
• Publicly available annual report summarizing key trends in the U.S. wind
power market, with a focus on 2013
• Scope primarily includes wind turbines over 100 kW in size
• Separate DOE-funded annual reports on distributed and offshore wind
• Data sources include AWEA, EIA, FERC, SEC, etc. (see full report)
Report Authors:
• Primary authors: Ryan Wiser and Mark Bolinger, Berkeley Lab
• Contributions from others at Berkeley Lab, Exeter Associates, NREL
Available at: http://www1.eere.energy.gov/wind/ [coming later in year]
Funded by: U.S. DOE Wind & Water Power Technologies Office
5 DOE/NREL Internal Use Only - Do Not Cite or Distribute
Introduction to the US wind market – market structure
• Project developers/owners are generally independent power producers (IPPs) although some direct ownership by investor owner utilities (IOUs) and publicly-owned utilities (POUs)
6 DOE/NREL Internal Use Only - Do Not Cite or Distribute
Introduction to the US wind market – market structure
• Wind power is generally sold through long-term power purchase agreements (PPAs) with 15 to 20 year terms with POUs and IOU counterparties, some is sold through merchant arrangements
• Long-term contracts are negotiated individually; prices are unique and reflect both project cost structure and local market conditions
7 DOE/NREL Internal Use Only - Do Not Cite or Distribute
Introduction to the US wind market – incentives
Production Tax Credit (PTC)
Investment Tax Credit (ITC)
Renewable Energy Credits (RECs)
Federal Policies
State Policies
Accelerated Depreciation
• Tax credit valued at $23 (€17) per MWh of production for the first 10 years of a project
• 30% of eligible CapEx is returned to investors as tax credit in first year of operation (Recovery Act)
• Majority of investment can be depreciated over a 5 year period for tax purposes
• Investors earn credits based on production • RECs are generally bundled with power in PPAs; but can
be sold independently as separate revenue stream • RECs priced by market, with demand set by state-
mandated renewable energy penetration levels
Carbon Credits • Nascent revenue stream based on emerging regional
GHG markets
Tax Credits/ Other Support
• Myriad of programs among states
WIND AND WATER POWER PROGRAM
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Regional Boundaries Overlaid on a Map of
Average Annual Wind Speed at 80 Meters
WIND AND WATER POWER PROGRAM
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• Capacity additions in 2013 were just 8% of 2012 additions
• $1.8 billion invested in wind power project additions
• Cumulative wind capacity up by less than 2%, bringing total to 61 GW
Wind Power Additions Stalled in 2013, with Only 1,087 MW of New Capacity Added
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Annual U.S. Capacity (left scale)
Cumulative U.S. Capacity (right scale)
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WIND AND WATER POWER PROGRAM
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• Capacity additions in 2013 were just 8% of 2012 additions
• $1.8 (€1.3) billion invested in wind power project additions
• Cumulative wind capacity up by less than 2%, bringing total to 61 GW
Wind Power Additions Stalled in 2013, with Only 1,087 MW of New Capacity Added
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Annual U.S. Capacity (left scale)
Cumulative U.S. Capacity (right scale)
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PTC Expires
WIND AND WATER POWER PROGRAM
• Led by decline in U.S. market, global additions 20% lower in 2013
• U.S. remains a distant second to China in cumulative capacity
The U.S. Fell to 6th Place in Annual Wind Power Capacity Additions
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Annual Capacity (2013, MW)
Cumulative Capacity (end of 2013, MW)
China 16,088 China 91,460 Germany 3,237 United States 61,110 India 1,987 Germany 34,468 United Kingdom 1,833 Spain 22,637 Canada 1,599 India 20,589 United States 1,087 United Kingdom 10,946 Brazil 948 Italy 8,448 Poland 894 France 8,128
Sweden 724 Canada 7,813 Romania 695 Denmark 4,747 Rest of World 7,045 Rest of World 51,031
TOTAL 36,137 TOTAL 321,377
Source: Navigant; AWEA project database for U.S. capacity
WIND AND WATER POWER PROGRAM
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U.S. Lagging Other Countries in Wind As a Percentage of Electricity Consumption
Note: Figure only includes the countries with the most installed wind power capacity at the end of 2013
WIND AND WATER POWER PROGRAM
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Wind Turbine Prices Remained Well Below the Levels Seen Several Years Ago
• Recent turbine orders in the range of $900-1,300/kW (€660-€950/kW),
with more-favorable terms for buyers and improved technology
WIND AND WATER POWER PROGRAM
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Lower Turbine Pricing Showing Up In Reported Total Project Costs