U.S. Wind Industry Faces Growth Constraints in 2009

After a record-breaking capacity expansion in 2009 with 9.8 gigawatts (GW) of wind projects installed, the U.S. wind market is faced with constrained growth in 2010, along with increased competition, according to a study from IHS Emerging Energy Research.

The market study, “U.S. Wind Power Markets and Strategies: 2010-2025,” finds that the U.S. wind industry is still on track to add more than 165 GW of new capacity through 2025, to reach a total installed base of 200 GW, thanks to favorable state and federal government policies.

The study forecasts that 6.3 to 7.1 GW of wind could be installed in 2010, which is 40 to 60 percent lower than 2009 installations.

“2010 marks the first time since 2004 that the U.S. wind industry will not surpass the previous year’s growth level. Despite unprecedented federal wind incentives, reverberations from the financial crisis continue to create a difficult near-term market landscape especially in light of continued energy policy uncertainty. However, the U.S. wind market is poised to emerge from this near-term uncertainty with a clearer path toward strong future growth,” stated Matthew Kaplan, senior analyst at IHS and one of the study’s authors.

IHS analysts forecast that the U.S. wind industry will represent $330 billion in investments between 2010 and 2025, with more than 90 percent of those investments from onshore wind. The Midwest, Great Plains and Rocky Mountain states are expected to become major wind export hubs to areas such as California, the Mid-Atlantic and the South.

As a result of limited growth in traditional wind states including Texas, Minnesota and California due to transmission congestion and lower utility demand for wind, developers are moving into states that have lower resources and more challenging development conditions, according to the report.

The study finds that transmission is one of the greatest barriers to the development of U.S. wind projects. But Kaplan says even if there were coordinated national policies to link wind resources with high-demand regions, it would take several years for projects to become operational.

Costs for new transmission lines could be very high. A recent NREL study indicates that a shift to 20 percent or more of the Eastern Interconnection’s electrical load to wind energy is possible by 2024, but costs for new transmission lines could be as high as $93 billion.

Another NREL report, which assesses the WestConnect grid in the mountain and southwest states, finds it can produce as much as 35 percent of its power from wind and solar sources without requiring a significant increase in infrastructure. The study focuses on the operational impacts of wind, photovoltaics, and concentrating solar power on the power system operated.

NREL analysts report that the rate premium that customers pay for green power continues to drop with wind energy representing approximately two-thirds of electricity generated for green energy programs nationwide.