Burst of construction in December delivers record year for US wind

Bloomberg New Energy Finance finds industry installed 13.2 gigawatts of capacity as equipment costs fell and the expiration of a key subsidy loomed

New York, 22 January 2013 – The US wind industry installed a record 13.2 gigawatts of new nameplate generating capacity in 2012 with a surge of new installations coming in the last month of the year. December 2012 alone saw 5.5GW installed – by far the most ever in a single month – as developers rushed to bring projects to completion ahead of expiration of the federal Production Tax Credit.

The figures were compiled by research company Bloomberg New Energy Finance, based on the world’s leading database of transactions and projects in clean energy. The previous record had been set in 2009, with 10GW installed. The 2012 capacity addition represented more than a 102% increase over 2011′s number, when the industry installed 6.5GW.

With the 2012 bonanza now in the books, wind projects account for 60GW of total cumulative capacity across the US, comprising 6% of the country’s overall electricity generating capacity.

Wind economics have improved dramatically in the last several years. Equipment prices, as tracked via Bloomberg New Energy Finance’s Wind Turbine Price Index, have fallen by more than 21% since 2010. Over the same period, performance of turbines, measured in terms of average capacity factor, has risen. These two effects combined have resulted in a more than 21% fall in the levelized cost of electricity for a typical US wind project since 2010.

Still, a policy-related factor helped drive 2012′s massive swell of development and construction activity, particularly in the last month of the year. The industry’s most important subsidy, the Production Tax Credit (PTC) was due to expire at midnight on 31 December; only projects becoming operational before that date would have qualified for the credit, barring legislative action to extend the incentive. Ultimately, Congress allowed the PTC to lapse but then retroactively extended it on 1 January of this year, as part of the so-called ‘fiscal cliff’ rescue package.

The 2012 numbers are especially striking in light of the attractiveness of competing options, specifically natural gas. On the back of the shale gas ‘miracle’ and the very mild winter of 2011-12, natural gas prices sank below $2/MMBtu in April 2012, the lowest in a decade. At these fuel prices, natural gas plants present stiff competition for wind projects when the two compete head-to-head to meet the needs of electric utilities. Bloomberg New Energy Finance estimates that the levelized cost of electricity for a wind project in the Texas Panhandle, the windiest part of the country, is below $30/MWh, when the PTC is taken into account as a benefit for the project owner. For comparison, wholesale power at today’s natural gas prices in that region costs roughly $25-30/MWh.

Many states have mandates requiring certain amounts of new clean energy generation be added each year. But this latest boom is being driven by different dynamics, according to Amy Grace, lead analyst, North American wind, at Bloomberg New Energy Finance.

“It’s clear that the economics, aided by the PTC, drove wind growth in 2012. 11GW of capacity was built in states without any near-term state mandated demand,” said Grace. “This means that in most areas, utilities are buying wind power because they want to, not because they have to.”

Though the industry had much to celebrate in 2012, the 2013 outlook is bleak. Wary of PTC uncertainty all of last year, developers and investors were reluctant to build pipelines for the coming year. Asset financing for US wind projects crested in the first half of 2012 at $9.6bn, in preparation for the 2012 burst, and then plummeted to $4.3bn in the second half of 2012. As a result, the upstream portion of the industry has taken grievous hits. Companies that produce turbines, blades, and other components of wind equipment – including manufacturers such as Vestas, Gamesa, Clipper and Siemens – have all either initiated or announced layoffs.

The leading wind developers behind the 2012 build numbers were NextEra (1.5GW new capacity added), Caithness Energy (0.8GW), and BP (0.8GW). Turbine manufacturers that were the greatest beneficiaries of these installations were GE (4.5GW of turbines sold to 2012 US wind projects), Siemens (2.9GW), and Vestas (2.2GW).

The table below shows statistics by state, for the top 10 states in terms of new 2012 US wind build.

Ranking // State // Wind build in 2012 (MW) // Cumulative wind capacity through 2012 (GW)
1 California  (1,738)  (5.5)
2 Kansas  (1,589)  (2.6)
3 Texas  (1,532)  (11.9)
4 Oklahoma  (1,224)  (3.0)
5 Oregon  (845)  (3.6)
6 Illinois  (803)  (3.6)
7 Iowa  (790)  (5.1)
8 Michigan  (700)  (1.0)
9 Pennsylvania  (568)  (1.4)
10 Colorado  (496) (2.5)

ABOUT BLOOMBERG NEW ENERGY FINANCE

Bloomberg New Energy Finance (BNEF) is the world’s definitive source of research, forecasts, data and news in clean energy and related industries, including power, gas, carbon and water. BNEF has staff of more than 200, based in London, Washington D.C., New York, Beijing, Hong Kong, Tokyo, New Delhi, Cape Town, São Paulo, Singapore, and Sydney.

BNEF Insight Services provide economic analysis in the following industries and markets: wind, solar, bioenergy, geothermal, hydro & marine, gas, nuclear, carbon capture and storage, energy efficiency, digital energy, energy storage, advanced transportation, carbon markets, REC markets, power markets and water. BNEF’s Industry Intelligence Service provides access to the world’s most comprehensive database of assets, investments, companies and equipment in the same sectors. The BNEF News Service is the leading global news service focusing on finance, policy and economics for the same sectors. The group also undertakes applied research on behalf of clients and runs senior-level networking events, including the annual BNEF Summit, the premier event on the future of the energy industry.

New Energy Finance Limited was acquired by Bloomberg L.P. in December 2009, and its services and products are now owned and distributed by Bloomberg Finance L.P., except that Bloomberg L.P. and its subsidiaries distribute these products in Argentina, Bermuda, China, India, Japan, and Korea. For more information on Bloomberg New Energy Finance: http://about.bnef.com.

ABOUT BLOOMBERG

Bloomberg, the global business and financial information and news leader, gives influential decision makers a critical edge by connecting them to a dynamic network of information, people and ideas. The company’s strength—delivering data, news and analytics through innovative technology, quickly and accurately—is at the core of the Bloomberg Professional service, which provides real time financial information to more than 300,000 subscribers globally. Bloomberg’s enterprise solutions build on the company’s core strength, leveraging technology to allow customers to access, integrate, distribute and manage data and information across organizations more efficiently and effectively. Through Bloomberg Law, Bloomberg Government and Bloomberg New Energy Finance, the company provides data, news and analytics to decision makers in industries beyond finance. And Bloomberg News, delivered through the Bloomberg Professional service, television, radio, mobile, the Internet and two magazines, Bloomberg Businessweek and Bloomberg Markets, covers the world with more than 2,300 news and multimedia professionals at 146 bureaus in 72 countries. Headquartered in New York, Bloomberg employs more than 13,000 people in 185 locations around the world.
More Press Releases >>