The U.S. wind energy market faces a future characterized by an unclear federal policy horizon, weak demand for new electricity generation and record-low natural-gas prices. As a consequence of these challenges and this year's construction bubble, the U.S. wind power market can expect to see a -12% compound annual growth rate over the next five years, according to a new analysis by MAKE Consulting.
On the face of it, the recent growth in new wind turbine installations in the U.S. might suggest a booming market. However, the 19% year-on-year growth in 2011 – and the expected 61% year-on-year growth in 2012 – are not bellwethers of a market recovery, but rather the final attempt by the industry to capitalize on soon-to-expire federal incentives – including the production tax credit (PTC).
In the report, MAKE outlines a range of federal policy scenarios for the 2013-2016 market forecast, including the following:
- Expiration of the PTC in 2012 with no follow-on federal policy support;
- A single-year PTC extension with no follow-on federal policy support;
- A two-year PTC extension passed in 2013;
- A single-year PTC extension, followed by a clean energy standard (CES); and
- A single-year PTC extension, followed by a seven-year PTC phase-out.
In addition to federal policy challenges, states' renewable portfolio standards (RPS) are also under attack, further threatening development, MAKE says.
MAKE's baseline scenario estimates that state RPS policies will support approximately 12 GW of wind from 2013 to 2016, or 3 GW per year on average when based on installed capacity.
The U.S. wind energy market will face substantial challenges in the coming months that will define the health of the sector for the next five years and will have a lasting impact on the nation's burgeoning supply chain, the study concludes.
