US Wind Energy Suffers in 2010, Cost-Competitive with Natural Gas in 2011

US adds 5,115 MW of wind energy in 2010, half of 2009 pace

With wind energy becoming cost-competitive with natural gas for new electric generation, the feast-or-famine, boom-and-bust cycle of wind energy development in the United States is poised to move into a growth phase at the beginning of 2011, according to industry officials.

The U.S. added 3,195 megawatts (MW) of wind generated electricity in the fourth quarter of 2010, a sharp increase from the 670 MW of new capacity added in the third quarter. But the 5,115-MW total for the year was still only half of what the industry added in its 2009 record year, according to a report issued yesterday by the American Wind Energy Association (AWEA).

“Wind power is a great deal right now in many areas of the country,” said Denise Bode, CEO of the American Wind Energy Association. “However, our industry continues to endure a boom-bust cycle because of the lack of long-term, predictable federal policies, in contrast to the permanent entitlements that fossil fuels have enjoyed for 90 years or more.”

The wind industry received good news in the final days of the 111th Congress, when a one-year extension of the 1603 Investment Tax Credit for renewable energy was passed, getting things moving in a positive direction for 2011. And with over 5,600 MW of electric power currently under construction and more projects expected to start up in time to meet the new construction deadline for the tax credit, now set to expire at the end of 2011, industry analysts are in good spirits.

“Wind’s costs have dropped over the past two years, with power purchase agreements being signed in the range of 5 to 6 cents per kilowatt-hour recently,” said Elizabeth Salerno, AWEA Director of Industry Data & Analysis. “With uncertainty around natural gas and power prices as the economy recovers, wind’s long-term price stability is even more valued. We expect that utilities will move to lock in more wind contracts, given the cost-competitive nature of wind in today’s market.”

With uncertainty over national policies still tempering growth in the U.S. wind energy sector, state targets for renewable energy continue to drive wind installations in many areas of the country. “We’ll continue to work for a strong federal energy policy that drives the deployment of renewable energy technologies in the 112th Congress,” Bode said, “but we’ll also be defending and improving on state renewable targets, as well as promoting other sources of demand – such as more distributed and community wind projects, and corporate purchasing under the new WindMade trustmark.”

For the first time, U.S. capacity fell to second globally behind China. China now has 41,800 MW in operation, an increase of 62% in capacity over a year ago. Total U.S. wind capacity is now 40,180 MW, an increase of 15% over the start of 2010.

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One comment on “US Wind Energy Suffers in 2010, Cost-Competitive with Natural Gas in 2011

Duane Steele

If we truly want to go green and compete in the wind power generation arena, we need to manage the tyoe of contracts that can be written for the sales of the wind power.

When a contract has language that allows the purchaser to shut down the power generation if they feel their fossil fuels are covering the demand, then we will see our wind farms at a standstill on days where they could be generating power. We need legislation that allows every KW that can be generated to be put into the system. Contracts should have a primary purchaser and the balance goes into a government controlled co-op. This way, we get every bit of wind power into the grid. Then we will start gaining on the move away from fossil fuels.

If the President expects us to get to 80% energy generation from renewable resources by 2035, then it needs to start with non-exclusive contracts.

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