U.S. companies built record 13.2 gigawatts worth of new wind power capacity in the country in 2012, according to a study released by Bloomberg New Energy Finance.
A story in the Charlotte Business Journal’s Jan. 18 print edition talks about the record year for wind construction that Duke Energy Renewables had, completing 770 megawatts worth of projects.
That includes two wind farms totaling 402 megawatts in Texas. That would be more than 26% of the 1.53 gigawatts of new wind capacity that Bloomberg says was built in that state last year.
Duke also completed 299 megawatts of new capacity in two Kansas projects — 18.8% of that state’s new capacity. Duke added 69 megawatts of new wind in Pennsylvania for 12.1% of that state’s total.
Overall, Duke completed about 6% of the new wind capacity in the United States last year. The largest wind developer in the nation last year was NextEra, which built 1.5 gigawatts of new capacity. But after that, the totals fall quickly, with Cathiness Energy and BP building about 800 megawatts each.
A large factor in the construction record is that companies rushed to complete projects before production tax credits for wind projects were scheduled to expire at the end of 2012.
But that was not the only factor, Bloomberg says. Falling prices for wind projects helped significantly. In the Texas panhandle — one of the nation’s best sites for wind — projects now have a levelized cost of less than $30 per megawatt hour. Natural gas projects — wind’s principal competitor in the current energy economy — have a levelized cost of $25 to $30 per megawatt hour.
Levelized costs calculate the price tag for all the factors going into energy production over the lifetime of a generating project, usually 20 to 40 years. These include the costs of construction, fuel and operations and maintenance.
‘Because they want to’
In an encouraging sign for the industry, Bloomberg notes the vast majority of the construction occurred in states that do not require power companies to use renewable resources.
“It’s clear that the economics, aided by the (production tax credit), drove wind growth in 2012. 11GW of capacity was built in states without any near-term state mandated demand,” says Amy Grace, Bloomberg’s lead analyst for wind in North America. “This means that in most areas, utilities are buying wind power because they want to, not because they have to.”
Annual wind construction in the U.S. proceeds in fits and starts. Bloomberg’s figures show that 2012 construction more than doubled the 6.5 gigawatts completed in 2011. And the previous record of 10 megawatts was set in 2010, Bloomberg reports.
The outlook for 2013 is fairly bleak, the report says. The tax credits were unexpectedly extended for a year during the fiscal-cliff negotiations in late December. But large-scale wind projects typically take close to a year or even longer to complete. The tax-credit extension came too late to encourage deals that could be built by the end of this year.
Surge for 2014?
However, the extension does not require a project to be finished by the end of this year to qualify for the tax credit (which had been the case under the rules that expired in 2012). It requires only that substantial construction of the project occur before the end of the year.
So the incentive for wind developers will be to get a significant number of projects started and well under way. A lot of man-hours will likely be spent in making deals and starting construction rather than finishing. That could mean a bust for new capacity in 2013 but another surge in 2014.
Duke expects a good environment for new power purchase agreements this year, but it does not expect to finish any projects it contracts for until sometime next year, Duke Renewables President Greg Wolf tells the CBJ in the weekly edition.