2012 wind technologies market report
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Energy Efficiency & Renewable Energy eere.energy.gov
1
Program Name or Ancillary Text eere.energy.gov
WIND AND WATER POWER PROGRAM
1
2012 Wind Technologies Market Report
Ryan Wiser and Mark Bolinger
Lawrence Berkeley National Laboratory
Report Summary
August 2013
WIND AND WATER POWER PROGRAM
2
2012 Wind Technologies Market Report Purpose, Scope, and Data:
• Publicly available annual report summarizing key trends in the U.S. wind power market, with a focus on 2012
• Scope primarily includes wind turbines over 100 kW in size
• Separate DOE-funded annual reports on distributed and offshore wind
• Data sources include AWEA, EIA, FERC, SEC, etc. (see full report)
Report Authors: • Primary authors: Ryan Wiser and Mark Bolinger, Berkeley Lab
• Contributions from others at Berkeley Lab, Exeter Associates, NREL
Funded by: U.S. DOE Wind & Water Power Technologies Office
Available at: http://www1.eere.energy.gov/wind/
WIND AND WATER POWER PROGRAM
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Report Contents • Installation trends • Industry trends • Cost trends • Performance trends • Wind power price trends • Policy and market drivers • Future outlook
WIND AND WATER POWER PROGRAM
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New to the Current Edition of the Report • Somewhat expanded analysis of wind turbine equipment
imports & exports as well as operations & maintenance costs
• Summary of trends in wind project capacity factors by turbine design and estimated wind resource conditions
• Further emphasis on full-term power purchase agreement prices levelized over the contract term
• Reporting certain data based on revised regional definitions and boundaries
WIND AND WATER POWER PROGRAM
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Key Findings • Wind has been a significant source of new generation in the U.S. • The supply chain is under duress, but domestic manufacturing
content remained strong in 2012 • Turbine scaling is boosting wind project capacity factors, while the
installed cost of wind is on the decline • Trends are enabling very aggressive wind power pricing and solid
economics in many regions despite low natural gas prices • It will take time to re-build the project pipeline, ensuring a slow
year for new additions in 2013, and then solid growth in 2014 • Medium to longer term growth remains uncertain, dictated in part
by future natural gas prices as well as state and federal policy decisions, though recent declines in the price of wind energy help boost the prospects for future growth
WIND AND WATER POWER PROGRAM
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Installation Trends
WIND AND WATER POWER PROGRAM
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• 13.1 GW of wind added in 2012, more than 90% higher than 2011 • $25 billion invested in wind power project additions • Cumulative wind power capacity up by 28%, bringing total to 60 GW
Wind Power Additions Hit a New Record in 2012, in Part Driven By the Then-Planned Expiration of Federal Tax Incentives
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1011121314
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Annual U.S. Capacity (left scale)
Cumulative U.S. Capacity (right scale)
Cum
ulat
ive
Cap
acity
(GW
)
Ann
ual C
apac
ity (G
W)
WIND AND WATER POWER PROGRAM
8
Wind Power Was the Largest Source of U.S. Generating Capacity Additions in 2012
• Wind was, for the first time, the largest resource added in terms of gross capacity, despite persistently low natural gas prices
0%
10%
20%
30%
40%
50%
0
20
40
60
80
100
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Tota
l Ann
ual
Cap
acity
Add
ition
s (G
W)
Wind Other Renewable GasCoal Other Non-Renewable Wind (% of Total)
Win
d Ca
paci
ty A
dditi
ons
(% o
f Tot
al A
nnua
l Cap
acity
Add
ition
s)
WIND AND WATER POWER PROGRAM
• U.S. led global growth in wind capacity in 2012; expected to lead global contraction in wind capacity additions in 2013
• Remains a distant second to China in cumulative capacity
The U.S. Narrowly Regained the Lead in Global Annual Wind Power Additions
9
Annual Capacity (2012, MW)
Cumulative Capacity (end of 2012, MW)
U.S. 13,131 China 75,372 China 12,960 U.S. 60,005 Germany 2,415 Germany 31,467 India 2,336 Spain 22,462 U.K. 1,958 India 18,602 Italy 1,272 U.K. 9,113 Spain 1,112 Italy 7,998 Brazil 1,077 France 7,593 Canada 936 Canada 6,214 Romania 923 Portugal 4,363 Rest of World 6,838 Rest of World 42,368 TOTAL 44,958 TOTAL 285,558
WIND AND WATER POWER PROGRAM
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U.S. Lagging Other Countries in Wind As a Percentage of Electricity Consumption
Note: Figure only includes the countries with the most installed wind power capacity at the end of 2012
WIND AND WATER POWER PROGRAM
11
Geographic Spread of Wind Power Projects in the United States Is Reasonably Broad
Note: Numbers within states represent cumulative installed wind capacity and, in brackets, annual additions in 2012.
WIND AND WATER POWER PROGRAM
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Texas Added the Most Wind Capacity in 2012; 9 States Exceed 12% Wind Energy
At end of 2012: • Texas had more
than twice as much wind capacity as any other state
• 22 states had >500 MW of capacity (15 > 1 GW, 10 > 2 GW)
• 3 states had the ability to provide >20% of total in-state generation from wind (9 > 10%, 17 > 5%)
WIND AND WATER POWER PROGRAM
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No Commercial Offshore Turbines Commissioned in the U.S., but 10 Projects Totaling 2.8 GW Are Somewhat More Advanced in Development
• Two projects have power purchase agreements (PPAs):
• Cape Wind (MA)
• Deepwater Wind (RI)
• PPA terms for Statoil project in ME approved by state regulators
• Scale model of floating turbine deployed in ME in June 2013
• MD established offshore wind set-aside within state’s RPS
WIND AND WATER POWER PROGRAM
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Interconnection Queues Demonstrate that An Enormous Amount of Wind Is Under Consideration but that Relative Interest in Wind May Be Declining
Wind represented ~37% of capacity in sampled 42 queues
But… absolute amount of wind (and coal & nuclear) in sampled queues has declined in recent years whereas natural gas and solar capacity has increased
Not all of this capacity will be built….
WIND AND WATER POWER PROGRAM
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95% of Wind Capacity Planned for Texas, Northwest, Southwest Power Pool, PJM, Midwest, Mountain Region, and California
Not all of this capacity will be built….
0
5
10
15
20
25
ERCOT Northwest SPP PJM MISO /Midwest
Mountain California New YorkISO
ISO-NewEngland
Southeast
Nam
epla
te W
ind
Pow
er C
apac
ity (G
W)
Entered queue in 2012 Total in queue at end of 2012
WIND AND WATER POWER PROGRAM
16
Industry Trends
WIND AND WATER POWER PROGRAM
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“Big 3” OEMs Captured >70% of U.S. Market in 2012, yet Diversification Continues
• 25 OEMs installed > 1 MW of turbines in the U.S. in 2012, compared to just 5 in 2005; some recapture of market share by “big 3” OEMs since 2008-09
• 2012 installations by Chinese and South Korean manufacturers included: Goldwind, China Creative, Guodian, Sinovel, Hyundai, HZ, Sany
• Globally, GE ascended to an effective tie with Vestas as the top supplier
0%
10%
20%
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60%
70%
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90%
100%
2005 2006 2007 2008 2009 2010 2011 2012
Other
Suzlon
Acciona
Clipper
Nordex
Mitsubishi
REpower
Gamesa
Vestas
Siemens
GE Wind
Turb
ine
Man
ufac
ture
r U.S
. Mar
ket S
hare
WIND AND WATER POWER PROGRAM
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Manufacturing Supply Chain Responded to Record Year in Wind Additions, but with Substantial Growing Pains
Note: map is not intended to be exhaustive
• Manufacturers met the challenge of supplying 13 GW in 2012, but the late extension of PTC found some with already reduced workforces or closed facilities in preparation for lower demand
• 7 of 10 turbine OEMs with largest share of U.S. market in 2012 had manufacturing facilities in the U.S. in 2012, compared to one OEM in 2004
• Small number of manufacturing facilities opened in 2012, with a larger number of facilities closing (including Clipper & Nordic)
WIND AND WATER POWER PROGRAM
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• Manufacturers have now begun receiving orders for 2013 and 2014, but it is not yet clear to what degree these orders will lead to a recovery of the sector
Over-Capacity of U.S. Nacelle Assembly Capability in Short Term Given Reduced Near-Term Deployment Expectations
• Near term forecasts for wind additions suggest an over-capacity of nacelle assembly capability in the short term, in contrast to 4 GW of under-capacity in 2009 and 1 GW of under-capacity in 2012
• 80,700 full time workers employed directly or indirectly in industry at end of 2012, but declines in manufacturing jobs
0
2
4
6
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14
2006 2007 2008 2009 2010 2011 2012 2013e 2014e
Win
d Tu
rbin
e N
acel
le A
ssem
bly
Cap
acity
in th
e U
.S. (
and
Win
d Tu
rbin
e In
stal
latio
ns) (
GW
)
Other
Nordex
Acciona
Siemens
Vestas
GE
U.S. TurbineInstallations
WIND AND WATER POWER PROGRAM
20
Growth in Both Wind-Related Equipment Imports and Exports in 2012
• Figure only includes selected trade categories; may miss other wind-related imports • See full report for the many assumptions used to generate this figure
0
1
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7
20062453 MW
20075253 MW
20088362 MW
200910005 MW
20105220 MW
20116819 MW
201213131 MW
Bill
ion
2012
$US
Gearboxes * (2012)Wind generators (2012)Wind blades and hubs (2012)Other wind-related equipment *Towers *Wind-Powered Generating Sets
US Imports:Exports of Wind-Powered Generating Sets
* estimated imports
Overall, the U.S. is a net importer of wind equipment Exports of wind-powered generating sets from the U.S. rose from $16 million in 2007 to $388 million in 2012 (almost entirely to Canada and Latin America)
WIND AND WATER POWER PROGRAM
21
Source Markets for Imports Vary Over Time, and By Type of Wind Equipment
• Considering total 2012 imports in these trade categories, almost half of import value comes from Asia, one-third from Europe, and significant amounts from Americas
• Majority of wind-powered generating sets from Europe
• Majority of tower imports from Asia; less from North America
• Most imports of blades & hubs from Brazil, China, and Denmark; diverse mix
• Under half of generators & parts imported from Asia; remainder Europe & North America
WIND AND WATER POWER PROGRAM
22
Despite Challenges, a Growing Percentage of the Equipment Used in U.S. Wind Projects Has Been Sourced Domestically
• If imports do not occur through other HTS codes, domestic content increased from: ~25% in 2006-07 to ~70% in 2012; whether these trends will be maintained in future years is highly uncertain
Figure may understate the wind industry’s reliance on imports because wind-related imports can occur under other trade categories not captured here
See full report for the many assumptions used to generate this figure
0
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2006-2007 2008-2009 2010-2011 2012*
Sel
ecte
d Im
port
Con
tent
as
Frac
tion
of T
urbi
ne C
ost
Billi
on 2
012$
US
Average Annual Turbine Equipment Cost (Calendar Year)Value of Selected Imports (Customs value, 4 month lag, Sept - Aug * )Selected Import Content
50%
40%
0%
30%
60%
70%
10%
20%
* For 2012, the import period is from September 2011 through November 2012.
80%
90%
100%
WIND AND WATER POWER PROGRAM
Average Capacity of Turbines Declined Slightly, but Average Hub Height and Rotor Diameter Continued to Increase
• Two periods of rapid scaling: 1998-2006 and 2009-present • 2007-2008 mostly stagnant, as OEMs focused on meeting demand
0.0
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100
1998-99 2000-01 2002-03 2004-05 2006 2007 2008 2009 2010 2011 2012
Commercial Operation Year
Average Nameplate Capacity (right scale)
Average Rotor Diameter (left scale)
Average Tower Height (left scale)
Met
ers
MW
23
WIND AND WATER POWER PROGRAM
Pace of Scaling Has Slowed Since 2006
• 6 years (2000-2005) for MW-class turbines to displace sub-MW-class • Another 7 years (2006-2012) for multi-MW-class turbines (2 MW and
above) just to gain nearly equal market share with MW-class 24
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1998-991,4291,027
2000-011,9841,761
2002-031,6852,075
2004-051,9002,769
20061,5302,453
20073,1995,253
20085,0158,361
20095,744
10,002
20102,9165,215
20113,4696,819
20126,753
13,131
Size
Dis
trib
utio
n (%
of t
urbi
nes d
eplo
yed)
>0.1 MW & <1 MW
≥1 MW & <2 MW
≥2 MW & <3 MW
≥3 MW
Year:Turbines:
MW:
WIND AND WATER POWER PROGRAM
25
The Project Finance Environment Held Steady in 2012 • Uncertainty surrounding the fate of the PTC in 2013 led to lower
commitments of both tax equity and debt in 2012 ‒ Yields in both markets, however, remained largely unchanged from 2011
• In the debt market, a seemingly permanent shift to shorter bank loan tenors has created an opportunity for institutional lenders and bond markets that can offer longer-maturity instruments ‒ Some developers are tapping into hybrid bank/bond instruments that play to
the strengths of both types of debt in offering what, from the developer’s perspective, appears to be a synthetic, fully amortizing long-term loan
• Next test of the depth of the tax equity market likely to be in 2014 ‒ Tax equity’s reluctance to commit to projects more than 12 months in advance
of commercial operations effectively turns the end-of-2013 PTC construction start deadline into an end-of-2014 commercial operations deadline
‒ Section 1603 cash grant now a thing of the past for wind, while the backlog of grandfathered solar projects with 1603 grants will have diminished somewhat by 2014, bringing renewed competition for tax equity
WIND AND WATER POWER PROGRAM
26
IPPs Remain the Dominant Owners of Wind Projects; Utilities Took a Breather in 2012
Utility ownership fell to 10% in 2012, down from 25% in 2011
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
10%
20%
30%
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60%
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90%
100%
1998
1999
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2008
2009
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2012
Other
Publicly Owned Utility (POU)
Investor-Owned Utility (IOU)
Independent Power Producer (IPP)
% o
f Cum
ulat
ive
Inst
alle
d C
apac
ity
Other:228 MW (2%)
IPP: 11,556 MW (88%)
IOU:1,128 MW (9%)
POU:219 MW (2%)
2012 Capacity byOwner Type
WIND AND WATER POWER PROGRAM
27
Long-Term Contracted Sales to Utilities Are the Most Common Off-Take Arrangement, and Have Gained Ground since the Peak of Merchant Development in 2008/2009
0%
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100%
0%
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100%
1998
1999
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2003
2004
2005
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2007
2008
2009
2010
2011
2012
On-Site Merchant/Quasi-Merchant Power Marketer POU IOU%
of C
umul
ativ
e In
stal
led
Cap
acity
Merchant:2,475 MW
(19%)
On-Site:94 MW (0.7%)
IOU:7,448 MW
(57%)
POU:2,957 MW
(23%)
Marketer:157 MW (1.2%)
2012 Capacity byOff-Take Category
WIND AND WATER POWER PROGRAM
28
Cost Trends
WIND AND WATER POWER PROGRAM
29
Wind Turbine Prices Remained Well Below the Levels Seen Several Years Ago
• Recent turbine orders reportedly in the range of $950-1,300/kW, with more-favorable terms for buyers and improved technology
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Jan-
13
Announcement Date
U.S. Orders <5 MW
U.S. Orders from 5 - 100 MW
U.S. Orders >100 MW
Vestas Global Average
Polynomial Trend Line for Orders
Turb
ine
Tran
sact
ion
Pric
e (2
012$
/kW
)
Recently reported global
average prices
Figure depicts reported transaction prices from 102 U.S. wind turbine orders totaling 27 GW
WIND AND WATER POWER PROGRAM
30
Reported Installed Project Costs Continued to Trend Lower in 2012
0
1,000
2,000
3,000
4,000
5,000
6,000
1982
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2012
Inst
alle
d Pr
ojec
t Cos
t (20
12 $
/kW
)
Commercial Operation Date
Individual Project Cost (689 projects totaling 49,414 MW) Capacity-Weighted Average Project Cost
Whereas turbine prices peaked in 2008/2009, project-level installed costs peaked in 2009/2010, reflecting the normal passage of time between when a turbine supply agreement is signed and when those turbines are actually installed
In 2012, the average cost was ~$1,940/kW, down ~$200/kW from 2011, and down $300/kW from the peak in 2009-10
WIND AND WATER POWER PROGRAM
31
Economies of Scale Evident, Especially at Lower End of Project Size Range
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
≤5 MW71 MW
34 projects
5-20 MW129 MW
10 projects
20-50 MW584 MW
17 projects
50-100 MW1,191 MW15 projects
100-200 MW3,717 MW28 projects
>200 MW3,723 MW14 projects
Inst
alle
d Pr
ojec
t Cos
t (20
12 $
/kW
) Capacity-Weighted Average Project Cost
Individual Project Cost
Sample includes projects built in 2012
WIND AND WATER POWER PROGRAM
32
Economies of Scale Also Evident By Turbine Size
• Theory: A project may be built less-expensively using fewer larger turbines instead of a larger number of smaller turbines
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
>0.1 & <1 MW10 MW
9 projects
≥1 & <2 MW4,136 MW51 projects
≥2 & <3 MW4,515 MW49 projects
≥3 MW752 MW
9 projects
Inst
alle
d Pr
ojec
t Cos
t (20
12 $
/kW
)
Capacity-Weighted Average Project Cost
Individual Project Cost
Sample includes projects built in 2012
WIND AND WATER POWER PROGRAM
33
Regional Definitions Based on Combination of Geography and Wind Resource
InteriorGreatLakes
West
Southeast
Northeast
WIND AND WATER POWER PROGRAM
34
Some Regional Differences in Average Wind Power Project Costs Are Apparent
Different permitting/development costs may play a role at both ends of spectrum: it’s easier/cheaper to build in the US interior and harder/more expensive along the coasts
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Interior42 projects3,827 MW
Northeast29 projects1,101 MW
Great Lakes21 projects1,529 MW
West25 projects2,938 MW
Southeast1 project19 MW
Inst
alle
d Pr
ojec
t Cos
t (20
12 $
/kW
)
Capacity-Weighted Average Project Cost Individual Project Cost Capacity-Weighted Average Cost, Total U.S.
Sample includes projects built in 2012
WIND AND WATER POWER PROGRAM
35
Operations and Maintenance Costs Varied By Project Age and Commercial Operations Date
Capacity-weighted average 2000-12 O&M costs for projects built in the 1980s equal $34/MWh, dropping to $23/MWh for projects built in 1990s, and to $10/MWh for projects built since 2000 Note: Sample is limited, and consists of 138 wind power projects totaling 9,022 MW; few projects in sample have complete records of O&M costs from 2000-12; O&M costs reported here DO NOT include all operating costs
WIND AND WATER POWER PROGRAM
36
Operations and Maintenance Costs Varied By Project Age and Commercial Operations Date
Note: Sample size is extremely limited
Data are consistent with a recent NREL analysis based on data from GL Garrad Hassan covering the first two years of operations for > 3 GW of wind: that analysis suggests that turbine O&M costs may have increased among more recent (post-2008) projects
O&M reported in figure does not include all operating costs: Statements from public companies with large U.S. wind asset bases report total operating costs in 2012 for projects built in the 2000s of ~$24/MWh
WIND AND WATER POWER PROGRAM
37
Performance Trends
WIND AND WATER POWER PROGRAM
Trends in Sample-Wide Capacity Factors Were Impacted by Curtailment and Inter-Year Wind Resource Variability
The wind resource index is compiled from NextEra Energy Resources reports. The pre-2007 portion of the index is adjusted to approximate the conversion from wind speed to generation (this adjustment is unnecessary starting in 2007). 38
0.00
0.15
0.30
0.45
0.60
0.75
0.90
1.05
1.20
0%
5%
10%
15%
20%
25%
30%
35%
40%
200010
591
200130
943
200273
2,682
200384
3,128
2004106
4,500
2005129
5,142
2006153
7,967
2007196
9,951
2008240
14,926
2009339
23,617
2010452
33,381
2011516
38,561
2012446
42,844
Long-Term W
ind Resource IndexSa
mpl
e-W
ide
Capa
city
Fac
tor
Capacity Factor Based on Estimated Generation (if no curtailment in subset of regions)
Capacity Factor Based on Actual Generation (with curtailment)
Wind Resource Index (right scale)
# MW:# Projects:
Year:
WIND AND WATER POWER PROGRAM
39
Wind Curtailment Is Substantial, but Appears to Have Declined in 2012
In areas where curtailment has been particularly problematic in the past – principally in Texas – steps taken to address the issue have started to bear fruit
Estimated Wind Curtailment (GWh and % of potential wind generation)
• ERCOT numbers represent both forced (non-market) and voluntary (market) curtailment
• All other regions show only forced curtailment
2007 2008 2009 2010 2011 2012 Electric Reliability Council of Texas (ERCOT)
109.1 (1.2%)
1,416.6 (8.4%)
3,872.2 (17.1%)
2,066.5 (7.7%)
2,621.5 (8.5%)
1,038.0 (3.7%)
Southwestern Public Service Company (SPS) N/A 0
(0.0%) 0
(0.0%) 0.9
(0.0%) 0.5
(0.0%) N/A**
Public Service Company of Colorado (PSCo) N/A 2.5
(0.1%) 19.0
(0.6%) 81.5
(2.2%) 63.9
(1.4%) N/A**
Northern States Power Company (NSP) N/A 25.4
(0.9%) 42.4
(1.7%) 44.3
(1.7%) 58.7
(1.6%) 120.5 (3.1%)
Midcontinent Independent System Operator (MISO) less NSP N/A N/A 249.6
(2.0%) 779.7 (4.2%)
782.6 (3.4%)
726.2 (2.5%)
Bonneville Power Administration (BPA) N/A N/A N/A 4.6*
(0.1%) 128.7* (1.4%)
70.8* (0.7%)
PJM N/A N/A N/A N/A N/A 111.6# (1.8%)#
Total Across These Seven Areas: 109 (1.2%)
1,444 (5.7%)
4,183 (9.7%)
2,978 (4.9%)
3,656 (4.9%)
2,067 (2.7%)
*A portion of BPA’s curtailment is estimated assuming that each curtailment event lasts for half of the maximum possible hour for each event. #2012 curtailment numbers for PJM are for June through December only (data for January through May are not available). **Xcel Energy declined to provide 2012 curtailment data for its SPS and PSCo service territories.
WIND AND WATER POWER PROGRAM
40
Even Controlling for These Factors, Average Capacity Factors for Projects Built After 2005 Have Been Stagnant
Sample-wide average not strongly trending higher with more-recent vintages as might be expected based on rotor and hub height scaling trends: does not incorporate 2012 scaling and does not control for wind resource quality
0%
10%
20%
30%
40%
50%
60%
1998-9923
776
2000-0124
1,514
2002-0336
1,908
2004-0527
3,417
200620
1,640
200734
4,931
200876
8,513
200995
9,561
201048
4,731
201163
5,854
Generation-Weighted Average (by project vintage) Individual Project (by project vintage)
2012
Cap
acity
Fac
tor (
by p
roje
ct v
inta
ge)
Sample includes 446 projects totaling 42.8 GW
Vintage:# projects:
# MW:
WIND AND WATER POWER PROGRAM
Despite Turbine Design Changes that Would Otherwise Boost Capacity Factors, Project Build-Out in Lower-Quality Wind Resource Areas Push the Other Way
All else equal: • Growth in rotor
swept area relative to turbine capacity (drop in specific power) will boost capacity factor
• Building projects in lower wind resource sites will hurt capacity factor
41
275
305
335
365
395
425
75
80
85
90
95
100
1998-99 2000-01 2002-03 2004-05 2006 2007 2008 2009 2010 2011 2012Commercial Operation Date
Average 80m Wind Resource Quality Among Built Projects (left scale)
Average Specific Power Among Built Projects (right scale)
Inde
x of
Win
d Re
sour
ce Q
ualit
y at
80m
(199
8-99
=100
)
Spec
ific
Pow
er (W
/m^2
)
WIND AND WATER POWER PROGRAM
Controlling for Wind Resource Quality Demonstrates Impact of Turbine Evolution
• Notwithstanding build-out of lower-quality wind resource sites, turbine design changes are driving capacity factors higher for projects located in fixed wind resource regimes
• Still too early for GE 1.6/100 turbines to be reflected in empirical capacity factor data: expect a much larger increase in years ahead
Wind Resource Quality is based on AWS Truepower site estimate of gross capacity factor at 80 m: • Lower = 30%-40% • Medium = 40%-50% • Higher = > 50%
42
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Lower(138 projects, 11.1 GW)
Medium(229 projects, 25 GW)
Higher(88 projects, 6 GW)
Wind Resource Quality
Specific Power Range of 200-300 (45 projects & 5,048 MW)
Specific Power Range of 300-400 (379 projects & 34,769 MW)
Specific Power Range of 400-500 (31 projects & 2,260 MW)
455 projects totaling 42.1 GW with commercial operation date of 1998-2011
Net
Cap
acity
Fac
tor (
in 2
011
and/
or 2
012)
WIND AND WATER POWER PROGRAM
43
Regional Variations in Capacity Factor Reflect the Strength of the Wind Resource
0%
10%
20%
30%
40%
50%
60%
Southeast4 projects308 MW
Northeast6 projects289 MW
West37 projects2,452 MW
Great Lakes15 projects2,077 MW
Interior48 projects5,430 MW
Generation-Weighted Average (by region)
Generation-Weighted Average (total U.S.)
Individual Project (by region)
2012
Cap
acity
Fac
tor
Sample includes 110 projects built in 2010 or 2011 and totaling 10.6 GW
WIND AND WATER POWER PROGRAM
44
Wind Power Price Trends
WIND AND WATER POWER PROGRAM
45
Sample of Wind Power Prices • Berkeley Lab collects data on historical wind power sales
prices, and long-term PPA prices
• PPA sample includes 302 contracts from projects built from 1998-2012, totaling 24,626 MW (42% of all wind capacity added in that period, and 70% of all capacity added that is sold under bundled PPAs)
• Prices reflect the bundled price of electricity and RECs as sold by the project owner under a power purchase agreement – Dataset excludes merchant plants and projects that sell renewable
energy certificates (RECs) separately
– Prices reflect receipt of state and federal incentives (e.g., the PTC or Treasury grant), as well as various local policy and market influences; as a result, prices do not reflect wind energy generation costs
WIND AND WATER POWER PROGRAM
Wind PPA Prices Generally Have Been Falling Since 2009 and Now Rival Previous Lows Set a Decade Ago
(this despite the trend to lower-quality wind resource sites)
46
$0
$20
$40
$60
$80
$100
$120
Jan-
96
Jan-
97
Jan-
98
Jan-
99
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
13
PPA Execution Date
Interior (14,802 MW, 173 contracts) West (6,835 MW, 68 contracts) Great Lakes (2,356 MW, 33 contracts) Northeast (855 MW, 20 contracts) Southeast (268 MW, 6 contracts)
Leve
lized
PPA
Pri
ce (2
012
$/M
Wh)
75 MW
150 MW
WIND AND WATER POWER PROGRAM
A Smoother Look at the Time Trend Shows Steep Recent Decline in Pricing; Especially Low Pricing in Interior Region
47
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
1996-9910
553
2000-0117
1,249
2002-0324
1,382
2004-0530
2,190
200630
2,311
200726
1,781
200839
3,465
200947
3,982
201040
3,999
201134
3,533
20128
630
Ave
rage
Lev
eliz
ed P
PA P
rice
(Rea
l 201
2 $/
MW
h)
Nationwide Interior
Great Lakes West
Northeast
PPA Year:Contracts:
MW:
WIND AND WATER POWER PROGRAM
48
Low Wholesale Electricity Prices Continued to Challenge the Relative Economics of Wind Power
• Wholesale price range reflects flat block of power across 23 pricing nodes across the U.S. • Recent wholesale prices reflect low natural gas prices, driven by weak economy and shale gas • Price comparison shown here is far from perfect – see full report for caveats
0
10
20
30
40
50
60
70
80
90
100
20039
570
200413
547
200517
1,643
200630
2,311
200726
1,781
200839
3,465
200947
3,982
201040
3,999
201134
3,533
20128
630
2012
$/M
Wh
Nationwide Wholesale Power Price Range (by calendar year)
Generation-Weighted Average Levelized Wind PPA Price (by year of PPA execution)
Wind project sample includes projects with PPAs signed from 2003-2012
PPA year:Contracts:
MW:
WIND AND WATER POWER PROGRAM
49
Gap Between Wholesale Prices and Wind PPA Prices Varied by Region in 2012
Notes: Within a region there are a range of wholesale prices because multiple price hubs exist in each area; price comparison shown here is far from perfect – see full report for caveats 0
10
20
30
40
50
60
70
80
90
100
Interior28 projects2,969 MW
Great Lakes4 projects219 MW
Northeast3 projects210 MW
West7 projects766 MW
Total US42 projects4,163 MW
Average 2012 Wholesale Power Price Range
Individual Project Levelized Wind PPA Price
Generation-Weighted Average Levelized Wind PPA Price
Wind project sample includes projects with PPAs signed in 2011 or 2012
2012
$/M
Wh
Wind PPA prices were most competitive with wholesale prices in the Interior region (where PPAs signed in 2011/2012 generally ranged from $20-40/MWh) and were least competitive in the West (with a PPA price range in 2011/2012 of under $50/MWh to over $90/MWh), with the Great Lakes and Northeast regions falling in between (with a PPA price range of roughly $50-70/MWh in 2011/2012)
WIND AND WATER POWER PROGRAM
50
Renewable Energy Certificate (REC) Prices Rose in Northeast, Remained Depressed Elsewhere
REC prices vary by: market type (compliance vs. voluntary); geographic region; specific design of state RPS policies
$0
$5
$10
$15
$20
Jan-
05Ju
l-05
Jan-
06Ju
l-06
Jan-
07Ju
l-07
Jan-
08Ju
l-08
Jan-
09Ju
l-09
Jan-
10Ju
l-10
Jan-
11Ju
l-11
Jan-
12Ju
l- 12
Jan-
13
Low-Price REC Markets
DC Tier 1 MD Tier 1OH Out-of -State PA Tier 1TX Voluntary Wind (National)Voluntary Wind (West)
$0
$20
$40
$60
$80
Jan-
05Ju
l-05
Jan-
06Ju
l-06
Jan-
07Ju
l-07
Jan-
08Ju
l-08
Jan-
09Ju
l-09
Jan-
10Ju
l-10
Jan-
11Ju
l-11
Jan-
12Ju
l-12
Jan-
13
High-Price REC Markets
CT Class I DE Class I IL WindMA Class I ME New NH Class INJ Class I OH In-State RI New
2012
$/M
Wh
WIND AND WATER POWER PROGRAM
51
Policy and Market Drivers
WIND AND WATER POWER PROGRAM
52
Short-Term Extension of Federal Incentives for Wind Helps Restart Domestic Market • Wind projects that begin construction before the end of 2013 are eligible to
receive the PTC or ITC • First-year “bonus depreciation” at 50% for projects built in 2013 • Treasury cash grant program available for projects that were under
construction by the end of 2011 and placed in service by the end of 2012 42% of the new wind capacity installed in 2012 elected the cash grant, a drop
from 62% of the capacity installed in 2011, 82% in 2010, and 66% in 2009 • Section 1705 loan guarantee has wound down: program closed on loan
guarantees to 1,024 MW of wind, 739 MW of which came online in 2012 • Little action on what are among the wind industry’s two highest priorities – a
longer-term extension of federal tax (or cash) incentives and passage of a federal renewable or clean energy portfolio standard – but the near-term extension of the PTC/ITC has helped restart the domestic wind market, and should enable moderate growth in capacity additions at least through 2014
WIND AND WATER POWER PROGRAM
53
State Policies Help Direct the Location and Amount of Wind Development, but Current Policies Cannot Support Continued Growth at Recent Levels
• 29 states and D.C. have mandatory RPS
• State RPS’ can support ~3-5 GW/yr of renewable additions on average from 2013-2020 (less for wind specifically)
WIND AND WATER POWER PROGRAM
54
Solid Progress on Overcoming Transmission Barriers Continued • 2,300 circuit miles of new transmission built per year, on average,
over the last 5 years; 18,700 circuit miles planned through 2015 • AWEA has identified near-term transmission projects that – if all
were completed – could carry almost 70 GW of wind capacity • FERC continued implementation of Order 1000, requiring public
utility transmission providers to improve planning processes and determine a cost allocation methodology for new transmission
• States, grid operators, regional organizations, and DOE continue to take proactive steps to encourage transmission investment to improve access to renewable resources
• Numerous transmission projects designed, in part, to support wind made further progress in development and/or construction in 2012; others faced set-backs
• Lack of transmission still a barrier to wind development in some regions (witness curtailment data shown earlier)
WIND AND WATER POWER PROGRAM
55
System Operators Implementing Methods to Accommodate Increased Wind Energy
Notes: Because methods vary and a consistent set of operational impacts has not been included in each study, results from the different analyses of integration costs and balancing reserves are not fully comparable. There has been some recent literature questioning the methods used to estimate wind integration costs and the ability to explicitly disentangle those costs.
Integrating wind energy into power systems is manageable, but not free of additional costs
WIND AND WATER POWER PROGRAM
56
Studies Find that Greater Wind Penetration Requires Increased Balancing Reserves
• The estimated increase in balancing reserves rarely exceeds 15% in these studies • “Fast” markets (i.e., with shorter scheduling periods) can generally integrate wind
more easily, with less need for increased balancing reserves (see graph on right)
WIND AND WATER POWER PROGRAM
57
Future Outlook
WIND AND WATER POWER PROGRAM
58
2013 Expected to Be a Slow Year for Wind Additions as Pipeline Recharges; Growth in 2014, then Uncertainty in 2015 and Beyond Forecasts for Annual U.S. Wind Additions (MW) Source 2013 2014 2015
Bloomberg NEF (2013a, 2013c) 2,800 8,000 3,200 IHS EER (2013) 2,000 6,000 7,300 Navigant (2013) 5,000 9,000 3,500 MAKE Consulting (2013) 3,500 7,700 4,500 EIA (2013b) 3,600 10,100 na
• Though PTC/ITC now available for projects that initiate construction by the end of 2013, it will take time to recharge the project pipeline
• While many projects will aim to meet the “start construction” deadline, 2013 will be a slow year, lowering not only U.S. but global growth forecasts
• 2014 is expected to be a strong year as developers commission projects that began construction in 2013
WIND AND WATER POWER PROGRAM
59
Current Low Prices for Wind Energy May Support Higher Growth in the Future, but Headwinds Include… • Lack of clarity about fate of federal tax incentives • Continued low natural gas and wholesale electricity prices • Modest electricity demand growth • Limited near-term demand from state RPS policies • Inadequate transmission infrastructure in some areas • Growing competition from solar in some regions Growth expectations in near term do not match what would be required to achieve 20% wind by 2030
WIND AND WATER POWER PROGRAM
60
U.S. Is on Early Trajectory that May Lead to 20% Wind Electricity; Projections for 2013-2015, However, Fall Short of Annual Growth Envisioned in 20% Report
0
35
70
105
140
175
210
245
280
315
0
2
4
6
8
10
12
14
16
18
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Deployment Path in 20% Wind Report (annual) Actual Wind Installations (annual) Deployment Path in 20% Wind Report (cumulative) Actual Wind Installations (cumulative)
Ann
ual C
apac
ity
(GW
)
range of annual projections
Cum
ulat
ive
Capa
city
(GW
)
WIND AND WATER POWER PROGRAM
61
Conclusions • Wind has been a significant source of new generation in the U.S. • The supply chain is under duress, but domestic manufacturing
content remained strong in 2012 • Turbine scaling is boosting wind project capacity factors, while the
installed cost of wind is on the decline • Trends are enabling very aggressive wind power pricing and solid
economics in many regions despite low natural gas prices • It will take time to re-build the project pipeline, ensuring a slow
year for new additions in 2013, and then solid growth in 2014 • Medium to longer term growth remains uncertain, dictated in part
by future natural gas prices as well as state and federal policy decisions, though recent declines in the price of wind energy help boost the prospects for future growth
WIND AND WATER POWER PROGRAM
62
For More Information... See full report for additional findings, a discussion of the sources of data used, etc.
• http://www1.eere.energy.gov/wind/
To contact the primary authors • Ryan Wiser, Lawrence Berkeley National Laboratory
510-486-5474, RHWiser@lbl.gov • Mark Bolinger, Lawrence Berkeley National Laboratory
603-795-4937, MABolinger@lbl.gov
Berkeley Lab’s contributions to this report were funded by the Wind & Water Power Technologies Office, Office of Energy Efficiency and Renewable Energy of the U.S. Department of Energy under Contract No. DE-AC02-05CH11231. The authors are solely responsible for any omissions or errors contained herein.
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