New Study Finds that the Price of Wind Energy in the US Is at an All-Time Low, and Competitiveness Improved
Wind energy pricing is at an all-time low, according to a new report released by the U.S. Department of Energy and prepared by Lawrence Berkeley National Laboratory (Berkeley Lab). The prices offered by wind projects to utility purchasers averaged just $25/MWh for projects negotiating contracts in 2013, spurring demand for wind energy.
“Wind energy prices—particularly in the central United States— are at an all-time low, with utilities selecting wind as the low cost option,” Berkeley Lab Staff Scientist Ryan Wiser said. “This is especially notable because, enabled by technology advancements, wind projects have increasingly been built in lower wind speed areas.”
Key findings from the U.S. Department of Energy's latest “Wind Technologies Market Report” include:
• Wind is a credible source of new generation in the United States. Though wind power additions slowed in 2013, with just 1.1 gigawatts (GW) added, wind power has comprised 33% of all new U.S. electric capacity additions since 2007. Wind power currently contributes more than 4% of the nation’s electricity supply, more than 12% of total electricity generation in nine states, and more than 25% in two states.
• Turbine scaling is boosting wind project performance. Since 1998-99, the average nameplate capacity of wind turbines installed in the United States has increased by 162% (to 1.87 MW in 2013), the average turbine hub height has increased by 45% (to 80 meters), and the average rotor diameter has increased by 103% (to 97 meters). This substantial scaling has enabled wind project developers to economically build projects in lower wind-speed sites, and is driving capacity factors higher for projects located in given wind resource regimes. Moreover, turbines originally designed for lower wind speeds are now regularly employed in higher wind speed sites, further boosting expected capacity factors.
• Low wind turbine pricing continues to push down installed project costs. Wind turbine prices have fallen 20 to 40% from their highs back in 2008, and these declines are pushing project-level costs down. Based on the small sample of 2013 wind projects, installed costs averaged $1,630/kW last year, down more than $600/kW from the apparent peak in 2009 and 2010. Among a larger sample of projects currently under construction, average costs are $1,750/kW.
• Wind energy prices have reached all-time lows, improving the relative competitiveness of wind. Lower wind turbine prices and installed project costs, along with improvements in expected capacity factors, are enabling aggressive wind power pricing. After topping out at nearly $70/MWh in 2009, the average levelized long-term price from wind power sales agreements signed in 2013 fell to around $25/MWh. This level is lower than the previous lows set back in the 2000-2005 period, which is notable given that wind projects have increasingly been sited in lower wind-speed areas. Wind energy prices are generally lowest in the central portion of the country. The continued decline in average wind prices, along with a bit of a rebound in wholesale power prices, put wind back at the bottom of the range of nationwide wholesale power prices in 2013. Wind energy contracts executed in 2013 also compare very favorably to a range of projections of the fuel costs of gas-fired generation extending out through 2040.
• The manufacturing supply chain has experienced substantial growing pains in recent years, but a growing percentage of the equipment used in U.S. wind projects has been sourced domestically since 2006-2007. The profitability of turbine suppliers rebounded in 2013, after a number of years in decline. Five of the 10 turbine suppliers with the largest share of the U.S. market have one or more manufacturing facilities in the United States. Nonetheless, more domestic wind manufacturing facilities closed in 2013 than opened. Additionally, the entire wind energy sector employed 50,500 full-time workers in the United States at the end of 2013, a deep reduction from the 80,700 jobs reported for 2012. Despite these challenges, trade data show that a decreasing percentage of the equipment used in wind projects has been imported, when focusing on selected trade categories. When presented as a fraction of total equipment-related wind turbine costs, the combined import share of selected wind equipment tracked by trade codes (i.e., blades, towers, generators, gearboxes, and wind-powered generating sets) is estimated to have declined from nearly 80% in 2006–2007 to approximately 30% in 2012-2013; the overall import fraction is higher when considering equipment not tracked in wind-specific trade codes. Domestic content has increased and is high for blades, towers, and nacelle assembly; domestic content is considerably lower for much of the equipment internal to the nacelle.
• Looking ahead, projections are for solid growth in 2014 and 2015, with uncertain prospects in 2016 and beyond. The availability of federal incentives for wind projects that began construction at the end of 2013 has helped restart the domestic market, with significant new builds anticipated in 2014 and 2015. However, as noted by Mark Bolinger, Research Scientist at Berkeley Lab, “Projections for 2016 and beyond are much less certain. Despite the attractive price of wind energy, federal policy uncertainty—in concert with continued low natural gas prices and modest electricity demand growth — may put a damper on medium-term market growth.”
© 2016 Wind on the Wires, All Rights Reserved
Wind Energy Boasts Bipartisan Support40+ Renewable Energy Employees Attend Clean Energy Advocacy SeminarSuccess! Final Michigan Public Engagement Meeting Highlights the ThumbLTE: Market Forces Impacting Coal Plan Retirement
Clean Power PlanMISOMedia NewsletterPTCPartnership UpdatesPast EventsRPSRegulatory CommissionsSitingSolarWind is cheaptransmission
15-556, 40x30, 50/50, 50/50 split, 111d, 2015, 2015 gala, accomplishments, advocacy, aes. sponsor, affordable, aima, alliant, amendment, ameren, amy kurt, anderson, ara, asthma, awea, badger-coulee, badger coulee, battery, baxter, beth soholt, big check, big stone city, bipartisan support, birkholz, blattner, board, board of directors, borgia, borst, brader, branstad, brimbert, broadwind, brookings, buy the farm, callisto, capacity, capacity shortfall, capx, capx2020, carbon, ce&j, chamber of commerce, christmann, clark, clean air, clean energy, clean energy and jobs, clean energy roundtable, clean jobs bill, clean jobs coalition, clean line, clean line energy, clean power plan, clinton, co-ops, coal, comed, community, community conversation, community wind, competitive procurement, construction, conversation, corporate buyers, corporate purchasing, cost, cost-effective, cost competitive, costs, cpcn, cpp, cpp analysis, crez, dahms, dalrymple, daugaard, dayton, dceo, deed, department of energy, dickens, dnr, docket er12-309, doe, dold, doug scott, dynergy, economic development, edpr, ee, eipc, electric vehicles, ellison, elpc, emf, enel, energy optimization, engagement meeting, enris, e nris, entergy, enxco, eo, eon, epa, ercot, eris, ev, events, exelon, external nris, factory, farm, ferc, ferc order 1000, flannery, fossil fuel, fox, fredrickson, gala, garofalo, generator refuel, gi, gouged by the wind, governor dayton, grain belt, grain belt express, grand prairie gateway, grant, gratiot, gre, great river energy, grid, grid modernization, grimbert, hall, hampton, hb 2543, hb 3523, health, health impacts, heartland, henley, hirner, huebsch, hvdc interconnection, hybrid interconnection, ia, iberdrola, icc, iec, il, illinois, illinois rivers, illinois state university, independent load, indiana, iowa, iowa environmental council, ipp, iptc, iptf, irp, itc, itpf, iurc, jackley, jacobs, jobs, jobs and energy omnibus bill, johnathan hladik, jon chase, justin pickar, kaplan, kaul, kenney, kfyrtv, kirk, koehler, kostyack, kowall, kuehn, kunkle, kvam, la crosse, land lease, largest wind energy producer, lavoy, leroy, lila, listening session, listening sessions, low-cost, ludington, mae, manitoba, manufacturing, marc, market opportunities, mark twain, marshall, mccollum, media training, media training event, member, members meetings, mep voltage, mi, michigan, michigan thumb loop, minnesota, minnesota power, minnkota, miso, missouri, mn, mo, modernization, morning consult, morning consult economic development, mortenson, mpca, mtep, mtep16, mtep 17, mtep17, mvp, mvps, nathaniel baer, natural gas, nd, nesbitt, new member, nicole luckey, nofs, north dakota, nowak, nrdc, nrg, nris, omnibus, order 1000, otter tail power, pac, peter rood, pilot hill, pjm, polar vortex, policy, poll, pollution, prairie rose, price, prices, production tax credit, proos, property tax, protest, psc, pscw, ptc, public engagement training, public utilities commission, puc, qol study, queue reform, quick hit process, rates, rauner, recb, recb task force, regulators, reliability, reliable, renewable energy, renewable portfolio standards, renz, republicans, res, resource adequacy, retirements, ricl, rochester, rock island, rock island clean line, roskam, roth, rothman, roundtable, rps, rule 111d, sanilac, savings, sb180, sb437, sb 437, sb 438, sb 858, schimel, schmidt, schomacker, schuette, scott, sd, sf1077, sheppard, sherco, shirkey, sims, sioux, siting, smith, snyder, soholt, sokolski, solar, solar capacity, south dakota, southwest regional development commission, spencer, spoon river, stakeholder process redesign, stakeholder reform, state energy plan, state update, storage, strategic energy assessment, streicker, success, survey, sutley, swedzinski, tax, tax credits, taxes, tenaska, tony clark, top ten, transfer capacity, transmission, tribes, update, utilities, utility, utton, ventower, vestas, viciana, victory, walker, wapa, ward, water, webber, wedding, weller, wi, wildlife, wind, wind and birds, wind development, wind energy, windlogics, windpower, windpower2015, wind siting, windswept farms, wind tour, wind vision, wisconsin, wowe, xcel, your voice matters, zorn
Not a Member? Want to know more?
Already a Member? Need web access?