Over the past five years, installed wind power capacity in the U.S. has increased at an annualized rate of 27.8% to about 57.616 GW, and industry revenue is expected to increase at an annualized rate of 15.1% to $5.8 billion over the five years ending this year, finds a new report from IBISWorld.
‘Annual industry revenue, however, is dependent not on the gradual implementation of wind power over many years, but on the level of new wind farm construction in any given year,’ notes IBISWorld industry analyst Kevin Boyland.
Consequently, revenue may increase or decrease dramatically in any given year. However, the looming expiration of the production tax credit (PTC) is casting a dark shadow of uncertainty over the industry.
"As wind farm developers rush to meet end-of-year installation deadlines to qualify for the PTC before it potentially expires, revenue is expected to increase by an astounding 59.9% in 2012," Boyland says.
However, regardless of whether the PTC is extended, wind turbine installation activity is expected to drop off significantly in 2013, according to the report. Amid such an uncertain environment, developers have delayed or scrapped plans for new turbine installations, and getting such plans back on track will not happen right away.
Moreover, the industry will have to contend with competition from the low price of natural gas and a meager increase in electric power consumption.
IBISWorld predicts that wind turbine installation revenue will decrease 23.6% per year on average to $1.5 billion over the five years ending in 2017. While this pales in comparison to the overall robust growth of the past five years, the industry still has some bright spots on the horizon.
First, firms will likely generate a larger portion of revenue from maintenance and repair activities, as operational wind turbines age and wind turbine technology becomes more sophisticated. At the same time, a drive toward offshore wind farms will expand the industry's scope moving forward, although the benefits will not be felt immediately, as these projects often take several years to develop.