U.S. Wind Generation Grew By More Than 8,000 MW In 2016

The December 2015 extension of the federal production tax credit (PTC) for wind power brought on a massive push for wind energy generation, according to the Department of Energy’s 2016 Wind Technologies Market Report. Nationwide, 8,203 MW of new capacity was added in 2016 and $13 billion was invested. “Supported by favorable tax policy and other drivers, cumulative wind power capacity grew by 11%, bringing the total to 82,143 MW,” the report says.

This rapid growth in the nation’s wind capacity is likely to continue, at least for a few more years, according to the report. “Analysts project that annual wind power capacity additions will continue at a rapid clip for the next several years, before declining, driven by the 5-year extension of the PTC signed in December 2015 and the progressive reduction in the value of the credit over time,” the report says.

The PTC was extended as a part of the omnibus spending bill approved by Congress in late 2015. The extension is meant to be a phase-down of the PTC, which provides the full PTC to projects that start construction prior to the end of 2016, before dropping in increments of 20 percentage points per year. Projects starting construction in 2017 will receive 80% of the credit, with 60% for projects starting construction in 2018, and 40% for projects starting construction in 2019.

Post-PTC projections are less rosy, however, according to the report.  “Forecasts for 2021 to 2025, on the other hand, show a downturn in part due to the PTC phase-out. Expectations for continued low natural gas prices, modest electricity demand growth, and lower near-term demand from state [renewables portfolio standard] policies also put a damper on growth expectations, as do inadequate transmission infrastructure and competition from solar energy in certain regions of the country.”

“The Department of Energy’s research shows that wind power is a bright spot on the American energy landscape,” Tom Kiernan, CEO of the American Wind Energy Association (AWEA) said in a release. “U.S. wind projects are already among the most productive in the world, and this new data proves we have even greater potential to deliver affordable, reliable and clean electricity to the American people.”

The report also finds that wind power is now more affordable than ever. According to a press release from the Lawrence Berkeley National Laboratory, which prepared the report for DOE, prices offered by newly built wind projects are averaging around 2¢/kWh.

“Wind energy prices—particularly in the central United States, and supported by federal tax incentives—are at all-time lows, with utilities and corporate buyers selecting wind as the low-cost option,” Berkeley Lab Senior Scientist Ryan Wiser said in the release.

Beyond the PTC, cost reductions are due in part to low equipment prices. According to the report, wind turbine prices are well below what they were a decade ago. “The capacity-weighted average installed project cost within our 2016 sample stood at roughly $1,590/kW. This is down $780/kW from the apparent peak in average reported costs in 2009 and 2010, but is roughly on par with—or even somewhat higher than—the installed costs experienced in the early 2000s,” the report says.

Wind power purchase agreement prices are also very low, according to the report. “After topping out at $70/MWh for PPAs executed in 2009, the national average levelized price of wind PPAs within the Berkeley Lab sample has dropped to around the $20/MWh level—though this latest nationwide average is admittedly focused on a sample of projects that largely hail from the lowest-priced Interior region of the country, where most of the new capacity built in recent years is located,” the report says.


Abby L. Harvey is a POWER reporter.

SHARE this article