AWEA: Wind Power Is Cost Competitive, But That Could Change

NAW Staff
Written by Laura DiMugno
on October 27, 2011 No Comments
Categories : New & Noteworthy

8807_wind_turbines AWEA: Wind Power Is Cost Competitive, But That Could Change The U.S. installed over 1.204 GW of wind power capacity in the third quarter – more than in any other quarter since 2008, the American Wind Energy Association (AWEA) said in its third-quarter market report.

The nation now has a cumulative installed wind power capacity of 43.461 GW, representing 3% of the U.S.' electricity production as of July.

By the end of the year, the U.S.' installed wind energy capacity is expected to fall between the industry's 2009 peak and its recent slump in 2010, as new wind capacity installed so far this year totals 3.360 GW – up 75% over last year at this time.

In addition, a staggering 8.4 GW of wind power are currently under construction, as companies race to get their projects online before the Dec. 31, 2012, production tax credit (PTC) in-service deadline. Incentives such as the PTC have led wind power to be nearly cost competitive with conventional sources of energy, AWEA's CEO, Denise Bode, said in a statement addressing the report.

Technological innovation and a burgeoning U.S. manufacturing industry have contributed to these cost reductions, the report noted. However, an extension of the PTC will be critical to wind's attractive pricing – as well as to the industry's overall success, Bode stressed.

"A lot of people will be surprised by how inexpensive wind energy rates are now, because it's happened so fast," she said. "We could lose all these consumer benefits and a brand-new, growing manufacturing sector if Congress allows the production tax credit to expire."

According to Bode, the wind power manufacturing sector has the potential to support a half a million jobs in less than 20 years – an argument she intends to make to lawmakers.

However, policy uncertainty is not the only factor keeping wind power from truly competing with traditional forms of energy. According to Department of Energy senior adviser Richard Kaufmann, who hosted a discussion on renewable energy last week, renewables have tended to be more expensive than traditional forms of energy because they lack the economies of scale that have already been established for conventional sources of energy.

Nonetheless, "Grid parity is not very far ahead," Kauffman noted, referring to both wind and solar energy.

The AWEA report cited several instances where wind power has been cost competitive with traditional forms of energy. For instance, in Texas, the Austin City Council recently approved two new wind power contracts totaling 291 MW, and authorized Austin Energy to negotiate a third wind contract for another 200 MW. Both contracts are priced in the $35/MWh to $45/MWh range, which the council says is comparable to natural-gas prices.

Texas is, of course, the most well-established wind energy market in the U.S., but the state did not install the most wind energy in the third quarter, but rather, came in at No. 5, with 88 MW installed during the quarter. First place went to Colorado, with 501 MW installed, followed by Minnesota, with 163 MW; Oklahoma, with 130 MW; and a somewhat surprising fourth-place state – West Virginia – with 98 MW.

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