Thriving U.S. Wind Industry Faces More Uncertain Future

The latest comprehensive assessment of U.S. wind generation, by researchers at the Lawrence Berkeley National Laboratory, finds the immediate situation to be very positive, but worries that the industry may be riding a wave that is cresting. At 6.8 GW, additions to U.S. wind generating capacity in 2011 were 31 percent higher than the year before and represented close to a third of new U.S. generating capacity. That made wind a close second to the booming U.S. natural gas generating industry. What is more, two thirds of wind turbine components were supplied by manufacturers in the United States, that fraction having grown steadily in recent years.

The downside is that a variety of incentives--a production tax credit and investment credits contained in the 2009 stimulus bill--are set to expire at the end of this year, even as U.S. manufacturers face stiffer foreign competition.

With turbines getting larger all the time--the 2011 average, at 1.97 MW, was 174 percent higher than in 1998-99--capacity factors (the ratio of actual output to theoretical maximum output) have been trending upwards. At the same time component costs have been trending downwards, and yet those trends have been slow to result in lower project installation costs or lower wholesale prices for wind-generated electricity, the report finds. The average 2011 wind electricity cost of US $74/MWh (or 7.4 cents per kilowatthour) is not radically different from what costs were a decade ago.

Though the immediate outlook for U.S. wind is highly uncertain, about 50 GW is now installed (47 GW at the end of last year), with 219 GW in possible new projects awaiting consideration in grid interconnection queues. (Those are projects that wind developers have proposed to grid operating authorities.) If all of those projects or an equivalent amount of similar projects were approved and built over the next two decades, which does not seem implausible, total wind capacity at around 250 GW would be about two-and-a half times total nuclear capacity, and wind would be in a position to generate about a fifth of the nation's electricity--roughly the same as nuclear's current share--a scenario the U.S. Department of Energy declared to be credible several years ago.

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