More than 55 GW of capacity will be commissioned in North America from 2015 to 2024, according to an analysis from MAKE Consulting.
According to MAKE, the declining levelized cost of energy (LCOE) of wind power will facilitate growth in both the U.S. and Canadian markets. Wind's LCOE is quickly approaching grid parity – particularly in the U.S., with its rich wind resources and world-class turbine technology. As such, competitive LCOEs will encourage more commercial and industrial power purchase agreements, and wind power will be increasingly deployed as a merchant asset in the near term.
Although prices of oil and natural gas have fallen recently, MAKE expects that the risk of volatility in natural gas prices will continue to drive demand for wind power as a hedge resource. MAKE's latest analysis illustrates the sensitivity of natural gas combined cycle's LCOE to natural gas prices.
As for Canada, MAKE forecasts the wind industry will commission nearly 4 GW of wind capacity from 2015 to 2017, but this level of growth will not be sustained. The next three years account for 47% of the entire 10-year outlook, as growth in Canada will be cut in half in 2018 from the 1.6 GW that the industry expects to reach in 2015.
The analysis predicts sluggish growth in Canada's electricity demand and competition from hydropower, natural gas power and nuclear fleet refurbishments. Alberta and British Columbia will contribute a spark in later years, but it will not be enough to offset waning demand in Ontario and Quebec.
In its analysis, MAKE included best-case and worst-case scenarios.Â
MAKE's bullish forecast for the U.S. says the potential for a phaseout of the production tax credit would bolster roughly 13 GW of upside through 2020. As multiple states consider proposals to strengthen their mandates, MAKE also projects that nearly 10 GW of additional demand for wind is possible from expanded renewable portfolio standards (RPS) through 2024.
On the other hand, however, MAKE says that opposition to RPS in the U.S., unmet renewable targets in Canada, and subdued natural gas prices and electricity demand for the region could hold down installations. As such, the worst-case assumptions reduce the 10-year wind power outlook by 41% in the U.S. and 33% in Canada.