ORIGINAL REPORTING: How the wind industry can continue its boom into the 2020s
Winds of change: How the industry can continue wind power's boom into the 2020s; Better grid integration and lower tech costs will be key to continuing wind's record growth, a new LBNL report finds
Herman K. Trabish, September 1, 2016 (Utility Dive)
Editor’s note: The wind boom goes on but the industry’s perspective on the post-2020 years has begun to shift since the Republicans took over the White House.
Wind power is no longer an “alternative” source of energy. On many parts of the grid, it’s the cheapest energy around. In the windy regions of the U.S. interior, the average power purchase agreement (PPA) price for wind in 2009 was about $55/MWh; in 2015, it was about $20/MWh, according to the Lawrence Berkeley National Laboratory (LBNL) 2015 Wind Technologies Market Report. The low prices have attracted recent major commitments from Warren Buffett’s MidAmerican Energy and Midwestern utility giant Xcel Energy. LBNL reports numbers that describe a mainstream source of power generation, including a cumulative installed capacity at the end of 2016 of over 82 GW. Wind’s low prices are due in part to the long term extension of the $0.023/kWh federal production tax credit (PTC) at the end of 2015, which will gradually phase out over the next five years. Throughout that time, wind’s growth is “projected to continue at a rapid clip,” LBNL reports.
The big questions now are how high the system penetration can get and how low prices can drop. Beyond the five-year horizon lie questions about whether the price can remain competitive, whether the U.S. bulk power system can continue to accommodate wind’s variability, and whether solar will out-compete it. LBNL forecasts of expected capacity additions averaging over 8,000 MW per year from 2016 to 2020 proved true last year. But they also suggest a potential downturn from 2021 to 2023. The key factor in the potential downturn is the stepped phase-down of the PTC from its full value for projects which begin construction by the end of 2016 and go online by the end of 2020. It will be 80% of that value for projects that go into construction in 2017, then 60% for the next year, and 40% for projects that begin construction by 2019. Adding to wind industry concerns are low natural gas prices, limited growth in electricity demand, slowing state renewables mandates, inadequate transmission infrastructure, and competition from utility-scale solar, LBNL adds… click here for more