As many predicted, the fallout from policy uncertainty led to a big drop in new installed wind capacity in the U.S. last year. According to the American Wind Energy Association's (AWEA) U.S. Wind Industry Fourth Quarter 2013 Market Report, the country saw 1.084 GW of wind come online in 2013. That is a 92% decrease from the 13.131 GW of new capacity installed during the record-breaking year of 2012.
However, the news isn't all bad. In fact, 2013 set a record of its own. At the end of the year, AWEA says there were more U.S. wind power megawatts under construction than ever in history: Over 12,000 MW (or, 12 GW) of new generating capacity were under construction in 2013, with a record-breaking 10.9 GW starting construction activity during the fourth quarter. The report notes the wind projects under construction could power the equivalent of 3.5 million American homes, or all the households in Iowa, Oklahoma and Kansas.
AWEA explains that the start of 2013 for the wind industry was slowed by uncertainty over the production tax credit (PTC), which was allowed to expire momentarily on Dec. 31, 2012, then extended the next day by Congress and signed back into law on Jan. 2, 2013, as part of the fiscal cliff deal.
Historically, when the PTC has been allowed to expire, AWEA says the U.S. industry has faced a 70% to 95% drop-off in installations. The association warns that the huge decrease seen in 2013 is a pattern that could repeat unless Congress acts to extend the PTC, which expired again on Dec. 31, 2013.
Nonetheless, AWEA says that the industry quickly rebounded toward the end of the year, signing a record number of term power purchase agreements (PPAs) and getting projects under construction in the fourth quarter. Developers pushed projects forward to meet new eligibility rules in the PTC, which required the companies to either start construction or spend 5% of the value of their projects by Dec. 31, 2013. Of the 1.084 GW of new wind farms installed in 12 states plus Puerto Rico last year, 1.012 GW were completed in the fourth quarter.
"Our current growth demonstrates how powerful the tax credit is at incentivizing investment in wind energy," says AWEA CEO Tom Kiernan. "Now it's up to Congress to ensure that growth continues by extending this highly successful policy."
AWEA adds that the record growth for wind energy at the end of 2013 resulted not only from the PTC (which provides upfront tax relief of $0.023/kWh for the first 10 years of a project), but also from investments in technological advancements that have driven down the cost of wind energy by 43% in just four years.
Other highlights from AWEA's report include the following:
– At least 60 PPAs for nearly 8 GW were signed by utilities and corporate purchasers, of which 5.2 GW have not yet started construction.
– Some of the states poised for major growth in wind energy in coming years include Texas, Iowa, Kansas, North Dakota and Michigan.
– There are now over 5.6 GW of turbine orders placed, with major manufacturing facilities active in regions such as Colorado, Kansas, Iowa and South Dakota.
According to AWEA, the momentum and excitement toward the end of 2013 will carry over into 2014 as factories fill orders for turbines and construction continues at wind farms, but the association emphasizes that uncertainty over the tax policy again looms and will deter new project development.
AWEA's full report can be found here.