TODAY’S STUDY: ALL THE NUMBERS ON WIND’S 2011

AWEA U.S. Wind Industry Annual Market Report; Year Ending 2011

April 12, 2012 (American Wind Energy Association)

Introduction

U.S. wind power installations took a pronounced upturn in 2011, and the year’s final numbers tell a multi-faceted story. Wind energy is now firmly established as a mainstream energy source, with a growing domestic manufacturing supply chain and ever-improving technology that has made U.S. wind power more competitive than ever.

Technological innovations and growing a domestic supply chain are pushing wind energy further down the cost curve. In addition to its other unique benefits, wind energy has zero fuel costs and locked-in electricity prices for decades.

The U.S. industry’s continued march forward, evidenced by over $13 billion in investment in 2011, is particularly impressive given the short-term policy uncertainty under which the industry is currently operating.

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In 2011 the wind industry installed 3,464 wind turbines across 96 wind projects for a total of 6,816 megawatts (MW) deployed in the U.S.

Despite challenges associated with policy uncertainty, a recovering economy, weak power demand, low electricity prices and dipping natural gas prices, the wind industry saw a 30 percent increase in new installations compared to the 5,214 MW installed in 2010.

Megawatts added in 2011 put total U.S. wind installations at 46,916 MW, a 17 percent increase that keeps the industry in the double digits for overall annual growth. Now at 2.9 percent of the overall U.S. generation mix as of 2011, and meeting over 10 percent of the electricity demand in five states, electricity from wind power capacity in the U.S. can supply the equivalent of the electricity used by over 12 million American homes.

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Wind power comprised 31 percent of all new generating capacity deployed in 2011, second only to new natural gas. That contribution marks a continuation of a lasting trend, as wind has installed 35 percent of all new capacity over the past five years.

Even with wind energy’s impressive growth rate here, which has now lasted years, America has barely begun to tap its wind resource. The country’s wind resource is as diverse as it is great, with the 10 million MW of wind potential in the U.S. spread uniquely across the country. The most active states in 2011 for most megawatts of new installations were California, Illinois, Iowa, Minnesota, and Oklahoma. While some long-time staple states in the wind industry installed the largest number of megawatts, states seeing the largest growth rates in 2011 tell a different story: Ohio, Vermont, Massachusetts, Michigan, and Idaho all more than doubled or nearly doubled their installed wind capacity in 2011 alone. And Kansas is setting the stage for a strong 2012 with the most new capacity under construction of any state in the U.S.

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The evolution of wind energy technology is evident just in turbines’ nameplate capacities. The average turbine size, after years of steady increases, jumped further in 2011 to nearly 2.0 megawatts (MW) in 2011, up from 1.77 MW in 2010 and 1.48 MW in 2005. A closer look at those turbines reveals characteristics that have been critical factors in another industry trend: wind power’s ability to access new regions and markets. Tower heights and rotor diameters (wingspan of the blades) are rapidly increasing, allowing developers to access better winds and capture more energy in areas previously not considered to have ideal wind resources. While the average hub height is 81 meters, hubs rising to 100 meters-plus—a threshold reached only in recent years—already comprises 5 percent of all turbines installed during 2011.

The top end of turbine rotor diameters also demonstrates wind’s continued progress; rotor diameters for turbines installed during 2011 averaged 92 meters, while over 55 percent of turbines installed have rotor diameters of 90 meters or greater, and nearly 23 percent of turbines are at 100 meters or greater.

This technological evolution is directly related to the advancing domestic turbine market and an increasingly made-in-the-U.S.A. wind manufacturing supply chain. The turbine market saw continued diversification, with 23 active turbine manufacturers installing 31 turbines with different ratings during 2011, up from only 5 turbine manufacturers in 2005.

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The U.S. wind supply chain that supports these turbine manufacturers already has a strong foothold in the U.S.: over 470 wind related manufacturing facilities, representing 30,000 wind manufacturing jobs, are now spread across the country. The growing manufacturing capacity here is reflected in the increasing domestic content of turbines, with 60 percent of U.S.-deployed turbines’ value being manufactured domestically in recent years (2009-2010), up from less than 25 percent prior to 2005.

As wind energy slides down the cost curve and provides a stable-priced product for electricity consumers, electric utilities continue to show increasing interest in including wind energy as part of their power portfolio. One example: When utility Xcel Energy secured a wind power purchase in 2011, in approving the contract, the Colorado Public Utilities Commission stated that “the contract will save ratepayers $100 million on a net-present-value basis over its 25-year term under a base-case natural gas price scenario” while providing the opportunity to “lock in” a price for 25 years.

In 2011, electric utilities signed at least 39 new long-term power purchase agreements (PPAs) for wind energy. Direct ownership of wind projects by utilities, meanwhile, increased in 2011 to reach 25 percent of all new wind capacity, up from 15 percent in recent years. Between new PPAs and direct ownership of wind power by electric utilities, 79 percent of all new wind capacity in 2011 was secured by some form of long-term power off take.

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As electric utilities expand their use of wind power, the transmission grid is also expanding. Progress was made in 2011, with new transmission lines being completed and revised rules helping expedite the process of integrating wind into the power grid. In coming years, several new transmission lines are planned that will be able to carry more than 44,600 MW of new wind power.

The U.S. wind power industry’s greatest challenge for 2012 is one with which the industry has lived for some time: short-term, unstable policy. The federal Production Tax Credit (PTC), a performance-based tax credit for kilowatt-hours produced by a wind farm once it is built, has typically been extended in only one- and two-year increments. The history of the PTC proves its effectiveness as a driver of billions of dollars of investment in the U.S., in the form of both project development across rural America, and a growing manufacturing sector for wind turbine components.

Stable policy—in the realm of what other energy sources have received for 90 years or more—would send the proper market signal that would allow U.S wind power to flourish to an even greater extent.

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While federal policy uncertainty still holds back the U.S. industry, other stable policy drivers remain in place. State targets for renewable energy continue to drive wind installations in many areas of the country.

As many as 29 states have renewables requirements, and still more states have renewables goals. California leads the way in this area; in 2011, the governor of California signed into law legislation that increases the state’s renewable electricity standard from an already strong 20 percent to an historic 33 percent by 2020.

The industry closed out last year with numbers that suggest a strong 2012, with 8,300 MW of wind power under construction as the year began. Meantime, with wind power now established as a mainstream energy source, the U.S. industry is ready and able to continue boosting the economy with investments in new projects across rural America, and greater demand for the supply chain that will expand this bright spot in America’s manufacturing sector even more.

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U.S. Wind Power Capacity Growth in 2011

The wind industry installed 6,816 MW in the U.S. in 2011, over a 30 percent increase over the new wind capacity installed in 2010. The wind power capacity added in 2011 represents a solid 17 percent growth in total U.S. wind installations, which now stand at 46,916 megawatts (MW).

The industry’s average annual growth for the past five years is now 33 percent. Equally impressive: electricity generated from wind power capacity in 2011 in the U.S. can supply the equivalent of over 12 million American homes.

Driving the growth of any industry is the customer; in wind power’s case, that customer is the electric utility. Tellingly, the number of signed wind power purchase agreements was up in 2011, with an increasing number of utilities being attracted to (and publicly acknowledging) the benefits of the wind power. Unlike other forms of generation, wind power comes with affordable, guaranteed prices for a period of timing spanning decades. Wind power is immune to fuel price volatility, providing stability and risk protection within utilities’ portfolios; more than ever utilities are drawn to wind power because of these attributes.

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Because wind power is affordable and secure, 2011 saw PPAs being signed all over the country, even in regions where those unfamiliar with wind power might have assumed the clean, affordable energy source would be less likely to be used. In 2011, Alabama Power, a subsidiary of The Southern Company, made its first wind power purchase.

In signing off on the contract, the Alabama Public Service Commission noted that the “price of energy from the wind facility is expected to be lower than the cost the company would incur to produce that energy from its own resource […] with the resulting energy savings flowing directly to the Company’s customers.” And in Colorado, in a late-2011 order approving a wind power purchase by Xcel Energy, the state Public Utilities Commission stated that “the contract will save ratepayers $100 million on a net-present-value basis over its 25-year term under a base-case natural gas price scenario” while providing the opportunity to “lock in a price for 25 years.”

To understand the scope of wind power’s growth and the achievements made by the maturing, now-mainstream industry during the last few years, it’s useful to look back and consider wind power’s growth numbers from when it was a mere emerging technology. It took nearly 25 years for the industry to reach 5,000 MW of capacity, from the early 1980s to 2003 (6,226 MW at the end of that year).

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That’s when wind power truly took off. After 2003, U.S. wind installations doubled in just three years, with the industry celebrating the milestone of exceeding 10,000 MW in 2006.

From there, the industry showed that it had only begun to ramp up. Within a mere two years, installations had doubled again, to 20,000-plus MW by 2008 and then, remarkably, two years later installations doubled still again, with 40,000 MW online by 2010. In just a few short years, wind power had become a major player on the energy landscape. In 2011, with another year of solid installation numbers under its belt, the industry further cemented itself as a primary contributor to the mix for newly installed electric capacity, accounting for 31 percent of all new generating capacity in 2011.

The U.S. wind power industry installed 3,446 MW in the fourth quarter, representing over 60 percent of total 2011 installations. The fourth quarter performance slightly exceeded the installations in the same period in 2010, and outpaced the first three quarters of 2011 combined. Strong fourth quarters are typical in the wind industry for reasons that include seasonal weather (i.e., developers want to finish projects before winter), the general business cycle and, in many years, impending expirations of the federal wind tax credit at the end of a given year.

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New wind power capacity continues to make up a large share of all new generation in the U.S., second only to natural gas. The natural gas industry installed nearly 42 percent of the year’s new electric generating capacity while wind power followed at roughly 31 percent, up from 26 percent in 2010.

Over the past five years, between 2007 and 2011, wind installed roughly 35 percent of all new generation capacity in the U.S.

All renewable capacity (wind, solar, biomass geothermal, and hydropower) combined for roughly 39 percent of all new generating capacity installed during 2011, similar to the amount of new natural gas added during the year.

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The new capacity numbers reveal that wind continues to be a mainstream player in the nation’s energy sector, given that it provided nearly a third of the new installed capacity even during a year characterized by strong market competition across energy sources, a recovering economy, and continued low natural gas prices. In 2011, the wind industry continued to see electric utilities sign long-term contracts for wind power, thanks to the stable and known terms such contracts provide, with 39 new power purchase agreements signed in 2011 alone by 30 different electric utilities…

Global Wind Power Capacity Growth in 2011…U.S. Wind Power Activity by State & Region…Owners & Developers of U.S. Wind Power Capacity…U.S. Utilities with Wind Capacity on Electric System…Characteristics of U.S. Wind Projects…U.S. Wind Power Project Financing Activities…Wind Turbine Manufacturing…U.S. Wind- Related Manufacturing Facilities…Benefits of Wind Energy…U.S. Wind Industry Employment…Types of Institutions Offering Wind Energy Programs…Wind’s Impact on Emissions…Wind’s Impact on Avoiding Water Consumption…Wind Power & Transmission…U.S. Offshore Project Activity…Distributed Wind Activity…