The recent history of the global wind industry points to the strong cumulative growth experienced by this energy sector during 2008 and 2009, prior to the recession. In 2008, the sector grew by 29 percent, and in 2009, by 32 percent, largely due to the significant number of projects initiated in late 2006 through 2008.
In 2010 there was a significant downturn in the sector, resulting in only a 22 percent growth rate, reflecting the impact of the recession. One of the effects of the economic situationon in the wind energy market in North America was a period of rapid growth and rapid contraction through 2008 to 2010. The sector still continued to mature, in the sense of becoming more like a traditional industrial sector, considering the fact that ten years earlier there had been very little wind industry at all in North America.
Wind Leads Global Non-hydropower Renewable Electricity Installed Capacity
Public sector policy and public sector investment continues to be the primary driver of wind energy, however, the costs of wind technology are coming down while costs for conventional fossil fuels are slated to rise over the long-term.
In some European countries, wind energy has reached approximately 20 percent of total electricity generation (with occasional peaks as high as 50 percent). Companies engaged in the the energy industry, recognize wind as having the potential to become a mainstream energy technology. While it is also recognized that this potential will not necessarily be reached everywhere on the globe, it is certainly possible in some jurisdictions where wind speed and direction profiles are consistent and sufficient enough to provide predictable levels of electricity generation. Some areas of the North American continent, where steady and reliable wind forces are forecast to occur, can satisfy these criteria.
Global Trends Affect the Industry
Understanding the North American wind energy requires an understanding of global trends affecting the industry. Because wind energy has an 18-month project cycle, the recent financial crisis and the recession had a delayed impact on the wind power market in terms of new installations.
For example, to illustrate the impact the recession had on wind energy development projects, the full effects were not seen until 2010, even though 2008 and 2009 were record years for North America, with a respective 8.9 GW and 10.9 GW installed. Only 5.8 GW was installed in 2010. Growth in the U.S. market fell 49 percent in 2010 (5.1 GW installed) from its peak in 2009 (9.9 GW installed).
The same cyclical pattern occurred in Canada, where 504 MW was installed in 2008, 969 MW in 2009, and 690 MW in 2010, fueled by provincial-level renewable portfolio standard (RPS) targets and, in some cases, very generous subsidies, especially in provinces like Ontario, which currently has about one-third of the country’s cumulative installed capacity.
Several Key Factors Will Impact the Future Wind Market
Two key factors that will shape the wind market over the next six years are:
- How the interrelationship between technological innovation and the policy environment evolves
- On a global scale, the availability of financial resources to fund future wind projects
Recent increase in U.S. installed wind power indicate an upward trend. More than 1,204 GW of wind power capacity was installed in the third quarter - more than in any other quarter since 2008, according to the American Wind Energy Association (AWEA).
This figure brings the U.S. installed wind power capacity to 43.461 GW, representing three percent of the country's electricity production as of July, 2011. By yearend, the U.S. installed wind energy capacity is to somewhere between the industry's 2009 peak and its recent slump in 2010. New wind capacity installed so far this year totals 3,360 GW, and increase of 75 percent year-to-date.
Production Tax Credits Spur Wind Installations Under Construction
The Dec. 31, 2012 in-service deadline for production tax credits (PTC) to be granted to companies in production mode, is spurring production, with a significant amount of wind power - 8.4 GW - currently under construction. PTC incentives can make wind energy almost cost-competitive with conventional sources of energy, according to AWEA’s CEO, Denise Bode.
While technological innovation and a burgeoning U.S. manufacturing industry have contributed to cost reductions in wind power development and construction, an extension of the PTC will be critical to wind’s attractive pricing. According to Bode, “a lot of people will be surprised by how inexpensive wind energy rates are now, because it’s happened so fast. “We could lose all these consumer benefits and a brand-new, growing manufacturing sector if Congress allows the production tax credit to expire.”
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.
Future Market Forecasts for Wind Power
The wind industry industry supports an estimated 670,000 jobs worldwide, with more than
20,000 manufacturing jobs located in North America. In 2010, a total of 5,784 MW of wind
capacity was installed in North America.
This continent currently accounts for more than 22 percent of the world’s total installed wind capacity and the U.S. is the second largest country-level wind market. The expansion of the wind energy sector in other countries, notably China, relegated North America to third place in cumulative installations in 2009, and the region is expected to fall further behind Asia Pacific and Europe.
Pike Research expects installations in the region to pass 125 GW by 2017, with offshore installations accounting for fewer than three percent of that total, and the firm forecasts approximately $145 billion to be invested in North America in onshore and offshore wind turbines installed between 2011 and 2017.
Duane Sharp - I am a retired professional engineer (electronics), with over 40 years of writing experience in technology topics, with a focus on the IT ...
