wind and water power technologies officeenergy.gov/sites/prod/files/2014/08/f18/2013 wind...

1

WIND AND WATER POWER TECHNOLOGIES OFFICE

August 20, 2014

2

2013 Wind Technologies Market Report

Purpose, Scope, and Data:

• Publicly available annual report summarizing key trends in the U.S. wind

power market, with a focus on 2013

• Scope primarily includes wind turbines over 100 kW in size

• Separate DOE-funded annual reports on distributed and offshore wind

• Data sources include AWEA, EIA, FERC, SEC, etc. (see full report)

Report Authors:

• Primary authors: Ryan Wiser and Mark Bolinger, Berkeley Lab

• Contributions from others at Berkeley Lab, Exeter Associates, NREL

Funded by: U.S. DOE Wind & Water Power Technologies Office

Available at: http://energy.gov/eere/wind/wind-program

3

Report Contents

• Installation trends

• Industry trends

• Technology trends

• Performance trends

• Cost trends

• Wind power price trends

• Policy & market drivers

• Future outlook

4

New to the Current Edition of the Report

• New chapter on technology trends, including the expanded

use of turbines originally designed for lower wind speed sites

• Comparison of wind power sales prices to projections of

future natural gas prices

• Expansion and refinement of manufacturing, supply chain,

and domestic content assessments

5

Key Findings • Annual wind additions were modest in 2013, but signals point to

more-robust growth in 2014/15

• Notwithstanding 2013, wind has been a significant source of new

generation in the U.S. since 2007

• Supply chain has been under duress, but domestic manufacturing

content for nacelle assembly, blades, and towers is strong

• Turbine scaling is boosting expected wind project performance,

while the installed cost of wind is on the decline

• Trends are enabling very aggressive wind power pricing and solid

economics in many regions despite low natural gas prices

• Growth after 2015 remains uncertain, dictated in part by future

natural gas prices, fossil plant retirements, and policy decisions,

though technological advancements and recent declines in the

price of wind energy have boosted future growth prospects

6

Installation Trends

7

• Capacity additions in 2013 were just 8% of 2012 additions

• $1.8 billion invested in wind power project additions

• Cumulative wind capacity up by less than 2%, bringing total to 61 GW

Wind Power Additions Stalled in 2013, with only 1,087 MW of New Capacity Added

0510152025303540455055606570

0123456789

1011121314

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

201

3

Annual U.S. Capacity (left scale)

Cumulative U.S. Capacity (right scale)

Cu

mu

lati

ve

Ca

pa

cit

y (

GW

)

An

nu

al

Ca

pa

cit

y (

GW

)

8

Wind Represented 7% of Electric-Generating Capacity Additions in 2013

But… from 2007-2013, wind represented 33% of capacity additions nation-wide, and a much higher proportion in some regions

Interior

GreatLakes

West

Southeast

Northeast

9

• Led by decline in U.S. market, global additions 20% lower in 2013

• U.S. remains a distant second to China in cumulative capacity

The U.S. Fell to 6th Place in Annual Wind Power Capacity Additions

Annual Capacity (2013, MW)

Cumulative Capacity (end of 2013, MW)

China 16,088 China 91,460 Germany 3,237 United States 61,110 India 1,987 Germany 34,468 United Kingdom 1,833 Spain 22,637 Canada 1,599 India 20,589 United States 1,087 United Kingdom 10,946 Brazil 948 Italy 8,448 Poland 894 France 8,128

Sweden 724 Canada 7,813 Romania 695 Denmark 4,747 Rest of World 7,045 Rest of World 51,031

TOTAL 36,137 TOTAL 321,377

Source: Navigant; AWEA project database for U.S. capacity

10

U.S. Lagging Other Countries in Wind As a Percentage of Electricity Consumption

Note: Figure only includes the countries with the most installed wind power capacity at the end of 2012

11

Geographic Spread of Wind Power Projects in the United States Is Reasonably Broad

Note: Numbers within states represent cumulative installed wind capacity and, in brackets, annual additions in 2013.

12

California Installed the Most Capacity in 2013; 9 States Exceed 12% Wind Energy

• Texas has more than twice as much wind capacity as any other state

• 23 states had >500 MW of capacity at end of 2013 (16 > 1 GW, 10 > 2 GW)

• 2 states have >25% of total in-state generation from wind (9 states > 12%)

Installed Capacity (MW) Percentage of

In-State Generation

Annual (2013) Cumulative (end of 2013) Actual (2013)*

California 269 Texas 12,354 Iowa 27.4%

Kansas 254 California 5,829 South Dakota 26.0%

Michigan 175 Iowa 5,177 Kansas 19.4%

Texas 141 Illinois 3,568 Idaho 16.2%

New York 84 Oregon 3,153 Minnesota 15.7%

Nebraska 75 Oklahoma 3,134 North Dakota 15.6%

Iowa 45 Minnesota 2,987 Oklahoma 14.8%

Colorado 32 Kansas 2,967 Colorado 13.8%

Ohio 3 Washington 2,808 Oregon 12.4%

Massachusetts 3 Colorado 2,332 Wyoming 8.4%

Alaska 3 New York 1,722 Texas 8.3%

North Dakota 2 North Dakota 1,681 Maine 7.4%

Indiana 1 Indiana 1,544 California 6.6%

Puerto Rico 1 Wyoming 1,410 Washington 6.2%

Pennsylvania 1,340 New Mexico 6.1%

Michigan 1,163 Montana 6.0%

Idaho 973 Hawaii 5.1%

South Dakota 783 Nebraska 4.8%

New Mexico 778 Illinois 4.7%

Montana 645 Vermont 3.4%

Rest of U.S. 0 Rest of U.S. 4,762 Rest of U.S. 0.8%

TOTAL 1,087 TOTAL 61,110 TOTAL 4.1% * Based on 2013 wind and total generation by state from EIA’s Electric Power Monthly.

Source: AWEA project database, EIA

13

No Commercial Offshore Turbines Commissioned in the U.S., but 15 Projects Totaling 5.1 GW Are Somewhat More Advanced in Development

• Two projects have power

purchase agreements (PPAs):

• Cape Wind (MA)

• Deepwater Wind (RI)

• Three demonstration projects

selected for deployment by DOE

• Scale model of floating turbine

deployed in ME in June 2013

• MD established offshore wind

set-aside within state’s RPS

• Fishermen (NJ), Baryonyx (TX)

Statoil (ME) faced set-backs

14

Interconnection Queues Demonstrate that a Substantial Amount of Wind Is Under Consideration

Wind represented ~36% of capacity in sampled 37 queues

But… absolute amount of wind (and coal & nuclear) in

sampled queues has declined in recent years whereas

natural gas and solar capacity has increased

Not all of this capacity will be built….

• AWEA reports >13 GW of capacity under construction after 1Q2014

15

95% of Wind Capacity Planned for Texas, Midwest, Southwest Power Pool, PJM, Northwest, Mountain Region, and California

Not all of this capacity will be built….

16

Industry Trends

17

GE Captured 90% of U.S. Wind Turbine Market Share in a Slow 2013

• Siemens came in a distant second, at 8% market share

• 2013 U.S. installations by Chinese and South Korean manufacturers only included Sany Electric (8 MW)

• Globally, Vestas recaptured the mantle as top supplier, with GE falling to 5th

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2006 2007 2008 2009 2010 2011 2012 2013

Other

Suzlon

Acciona

Clipper

Nordex

Mitsubishi

REpower

Gamesa

Vestas

Siemens

GE Wind

Tu

rbin

e M

an

ufa

ctu

rer

U.S

. M

ark

et

Sh

are

18

Manufacturing Supply Chain Experienced Substantial Growing Pains

Note: map is not intended to be exhaustive

• Over last decade, foreign and domestic

manufacturers have localized and

expanded U.S. manufacturing presence

• 5 of 10 turbine OEMs with largest share

of U.S. market through 2013 had

manufacturing facilities in the U.S. at the

end of 2013, compared to one in 2004

• Uncertain demand and growing global

competition have created strain: general

trend in 2013 was towards reduced

workforce or closed facilities

• Only one facility opened in 2013, with a

larger number closed or dormant

• Wind related jobs declined from 80,700

in 2012 to 50,500 in 2013

19

Domestic Manufacturing Capability for Nacelle Assembly, Towers and Blades Is Reasonably Well Balanced Against Near-Term Demand Forecasts

20

After a Number of Years in Decline, Turbine OEM Profitability Rebounded in 2013

21 21

Sharp Decline in Wind-Related Imports and Stable Exports in 2013

• Figure only includes selected, tracked trade categories; misses other wind-

related imports

• See full report for the many assumptions used to generate this figure

* estimated imports

U.S. is a net importer

of wind equipment

Exports of wind-

powered generating

sets increased

modestly in 2013 to

$421 billion; no ability

to track other wind-

specific exports, but

total tower exports

equalled $129 million

22

Tracked Wind Equipment Imports in 2013 Mostly from Asia, the Americas, and Europe

Note: Tracked wind-specific equipment includes: wind-powered generating sets,

towers, hubs and blades, wind generators and parts.

23

Source Markets for Imports Vary Over Time, and By Type of Wind Equipment

• Considering total 2013 imports in these

selected trade categories: 45% from

Asia, 38% Americas, 16% from Europe

• Majority of wind-powered generating

sets from home countries of OEMs, but

share from Europe in recent decline

• Majority of tower imports from Asia

(less from North America), but tariff

measures largely stopped imports from

China and Vietnam in 2013

• Most imports of blades & hubs from

Brazil and China in 2013

• Globally diverse sourcing strategy for

generators & parts, with increase from

Asia in 2013

24

Despite Supply Chain Challenges, a Growing Amount of the Equipment Used in U.S. Wind Projects Has Been Sourced Domestically since 2006-07

Because imports occur in untracked trade categories, including many nacelle internals, overall import (domestic) content is higher (lower) than suggested here: in 2012, overall domestic content estimated at ~40%

When presented as a fraction of

equipment-related turbine costs, the

combined import share of tracked

wind equipment (i.e., blades, towers,

generators, gearboxes, and wind-

powered generating sets) has

declined from nearly 80% in 2006-

2007 to ~30% in 2012-2013.

See report for the assumptions used

to generate these figures

Approximate Domestic Content of Major Components in 2012-2013

Generators Towers Blades Wind-Powered Generating Sets

< 10% 50-70% 60-80% > 80% of nacelle assembly

0%

20%

40%

60%

80%

100%

2006-2007 2008-2009 2010-2011 2012-2013

Domestic Wind Equipment and Untracked Imports

Tracked Imports of Wind Equipment

25

The Project Finance Environment Held Steady in 2013

• Notable events included the launch of several renewable energy “yieldcos”

• Tax equity and term debt yields held relatively steady in 2013

• Project sponsors raised $3.1 billion of tax equity and $2.4 billion of debt

0%

2%

4%

6%

8%

10%

12%

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

Tax Equity Yield (after-tax)

15-Year Debt Interest Rate (after-tax)

15-Year Debt Interest Rate (pre-tax)

26

IPPs Own 95% of the New Wind Capacity Installed in 2013

New utility ownership continued to languish for the second year in a row,

at just 4% of the 2013 wind capacity additions

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Other

Publicly Owned Utility (POU)

Investor-Owned Utility (IOU)

Independent Power Producer (IPP)

% o

f C

um

ula

tive In

sta

lled

Cap

acit

y

Other:11 MW (1%)

IPP: 1,030 MW (95%)

IOU:45 MW (4%)

POU:2 MW (0%)

2013 Capacity byOwner Type

27

27

Long-Term Contracted Sales to Utilities Remained the Most Common Off-Take Arrangement, but Merchant Projects Have Regained some Favor, at Least in Texas

28

Technology Trends

29

Turbine Nameplate Capacity, Hub Height, and Rotor Diameter Have All Increased Significantly Over the Long Term

30

Growth in Rotor Diameter Has Outpaced Growth in Nameplate Capacity and Hub Height in Recent Years

Nameplate Capacity

Hub Height

Rotor Diameter

31

Turbines Originally Designed for Lower Wind Speed Sites Have Rapidly Gained Market Share

Specific Power

IEC Class

Specific Power by IEC Class 2 & 3

32

Turbines Originally Designed for Lower Wind Speeds Are Now Regularly Employed in Both Lower and Higher Wind Speed Sites, Whereas Taller Towers Predominate in Lower Wind Speed Sites

By Region By Wind Resource Quality

33

Performance Trends

34

Trends in Sample-Wide Capacity Factors Have Been Impacted by Curtailment and Inter-Year Wind Resource Variability

The wind resource index is compiled from NextEra Energy Resources reports. The pre-2007 portion of the index is adjusted to

approximate the conversion from wind speed to generation (this adjustment is unnecessary starting in 2007).

0.00

0.15

0.30

0.45

0.60

0.75

0.90

1.05

1.20

0%

5%

10%

15%

20%

25%

30%

35%

40%

200010

591

200130

943

200273

2,682

200384

3,128

2004106

4,500

2005129

5,142

2006153

7,967

2007196

9,951

2008240

14,926

2009339

23,617

2010452

33,381

2011516

38,562

2012601

44,599

2013582

57,157

Lon

g-T

erm

Win

d R

eso

urce

Ind

ex

Sa

mp

le-W

ide

Ca

pa

city

Fa

cto

r

Capacity Factor Based on Estimated Generation (if no curtailment in subset of regions)

Capacity Factor Based on Actual Generation (with curtailment)

Wind Resource Index (right scale)

# MW:# Projects:

Year:

35

Wind Curtailment Is Substantial, but Has Generally Declined in Recent Years

In areas where curtailment has been particularly

problematic in the past – principally in Texas –

steps taken to address the issue have born fruit

Estimated Wind Curtailment (GWh and % of potential wind generation)

MISO, ERCOT, NYISO, and PJM track both forced and economic curtailment, while BPA, NSP, PSCo, and SPS likely only capture forced curtailment

2007 2008 2009 2010 2011 2012 2013

Electric Reliability Council of Texas

(ERCOT)

109

(1.2%)

1,417

(8.4%)

3,872

(17.1%)

2,067

(7.7%)

2,622

(8.5%)

1,175

(3.8%)

363

(1.2%)

Southwestern Public Service Company

(SPS) N/A

0

(0.0%)

0

(0.0%)

0.9

(0.0%)

0.5

(0.0%) N/A** N/A**

Public Service Company of Colorado

(PSCo) N/A

2

(0.1%)

19

(0.6%)

82

(2.2%)

64

(1.4%)

115(e)

(2.0%)

112(e)

(1.7%)

Northern States Power Company

(NSP) N/A

25

(0.9%)

42

(1.7%)

44

(1.7%)

59

(1.6%)

125

(3.0%)

284

(5.9%)

Midwest Independent System Operator

(MISO), less NSP N/A N/A

250

(2.0%)

780

(4.2%)

792

(3.4%)

724

(2.5%)

1,470

(4.6%)

Bonneville Power Administration

(BPA) N/A N/A N/A

5*

(0.1%)

129*

(1.4%)

71*

(0.7%)

6*

(0.1%)

New York Independent System

Operator (NYISO) N/A N/A N/A N/A N/A

9

(0.3%)

50

(1.4%)

PJM N/A N/A N/A N/A N/A 125

#

(2.0%)#

284

(1.9%)

Total Across These Eight Areas: 109

(1.2%)

1,444

(5.7%)

4,183

(9.7%)

2,978

(4.9%)

3,665

(5.0%)

2,345

(2.6%)

2,569

(2.5%)

36

Even Controlling for These Factors, Average Capacity Factors for Projects Built After 2005 Have Been Stagnant

0%

10%

20%

30%

40%

50%

60%

1998-9925

921

2000-0127

1,765

2002-0338

1,988

2004-0528

3,651

200622

1,739

200738

5,284

200880

8,522

200995

9,426

201048

4,733

201166

5,760

2012115

13,368

Weighted Average (by project vintage)

Individual Project (by project vintage)

20

13

Cap

acit

y Fa

cto

r (b

y p

roje

ct v

inta

ge)

Sample includes 582 projects totaling 57.2 GW

Vintage:# projects:

# MW:

37

Trends Explained by Competing Influence of Lower Specific Power and Build-Out of Lower Quality Wind Resource Sites

All else equal:

• Drop in average specific power will boost capacity factors

• Building projects in lower wind resource sites will hurt capacity factors

200

250

300

350

400

80

85

90

95

100

1998-99 2000-01 2002-03 2004-05 2006 2007 2008 2009 2010 2011 2012 2013

Commercial Operation Date

Average 80m Wind Resource Quality Among Built Projects (left scale)

Average Specific Power Among Built Projects (right scale)

Ind

ex

of

Win

d R

eso

urc

e Q

ua

lity

at

80

m (

19

98-

99

=1

00

)

Ave

rag

e S

pe

cifi

c P

ow

er

(W/m

^2

)

38

Controlling for Wind Resource Quality and Specific Power Demonstrates Impact of Turbine Evolution

Notwithstanding build-out of lower-quality wind resource sites, turbine design changes

are driving capacity factors higher for projects located in given wind resource regimes

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Lower124 projects, 9.1 GW

Medium146 projects, 16.5 GW

Higher196 projects, 23.4 GW

Highest75 projects, 7.3 GW

Wind Resource Quality

Specific Power ≥ 400 (31 projects, 3.0 GW)

Specific Power range of 300-400 (377 projects, 40.0 GW)

Specific Power range of 220-300 (121 projects, 11.6 GW)

Specific Power < 220 (12 projects, 1.7 GW)

Sample includes 541 projects totaling 56.3 GW with a commercial operation date of 1998-2012

We

igh

ted

Ave

rage

Ca

pa

city

Fa

cto

r in

20

13

39

Controlling for Wind Resource Quality and Commercial Operation Date Demonstrates Impact of Turbine Evolution

Notwithstanding build-out of lower-quality wind resource sites, turbine design changes

are driving capacity factors higher for projects located in given wind resource regimes

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1998-99 2000-01 2002-03 2004-05 2006 2007 2008 2009 2010 2011 2012

We

igh

ted

Av

era

ge

20

13

Ca

pa

city

Fa

cto

r

Project Vintage

Highest Higher Medium Lower

40

Regional Variations in Capacity Factors Reflect the Strength of the Wind Resource and Adoption of New Turbine Technology

0%

10%

20%

30%

40%

50%

60%

West29 projects3,665 MW

Northeast14 projects1,053 MW

Great Lakes15 projects1,823 MW

Interior55 projects6,703 MW

Weighted Average (by region)

Weighted Average (total U.S.)

Individual Project (by region)

20

13

Ca

pa

city

Fa

cto

r

Sample includes 113 projects built in 2012 and totaling 13.2 GW

41

Cost Trends

42

Wind Turbine Prices Remained Well Below the Levels Seen Several Years Ago

• Recent turbine orders reportedly in the range of $900-1,300/kW, with more-favorable terms for buyers and improved technology

Figure depicts reported transaction prices from 112 U.S. wind turbine orders totaling 29 GW

43

Reported Installed Project Costs Continued to Trend Lower in 2013

• The limited sample of 2013 projects had an average cost of $1,630/kW,

down substantially from previous years

• Larger sample of under-construction projects average $1,750/kW

0

1,000

2,000

3,000

4,000

5,000

6,000

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

Inst

all

ed

Pro

ject

Co

st (

20

13

$/k

W)


Individual Project Cost (708 projects totaling 50,210 MW)

Capacity-Weighted Average Project Cost

44

Economies of Scale Evident, Especially at Lower End of Project & Turbine Size Range

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

≤5 MW87 MW

41 projects

5-20 MW155 MW

13 projects

20-50 MW721 MW

20 projects

50-100 MW1,411 MW18 projects

100-200 MW3,860 MW29 projects

>200 MW3,973 MW15 projects

Inst

alle

d Pr

ojec

t Co

st (2

013

$/kW

) Capacity-Weighted Average Project Cost

Individual Project Cost

Sample includes projects built in 2012-2013

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

>0.1 & <1 MW11 MW

10 projects

≥1 & <2 MW4,720 MW62 projects

≥2 & <3 MW4,656 MW53 projects

≥3 MW819 MW

11 projects

Inst

alle

d P

roje

ct C

ost

(20

13 $

/kW

)




Project Size

Turbine Size

45

Some Regional Differences in Average Wind Power Project Costs Are Apparent

Different permitting/development costs may play a role at both ends of spectrum: it’s easier/cheaper to build in the US interior and harder/more expensive along the coasts

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500


Northeast33 projects1,191 MW

Great Lakes23 projects1,534 MW


Southeast1 project19 MW

Inst

alle

d P

roje

ct C

ost

(2

01

3 $

/kW

)



Capacity-Weighted Average Cost, Total U.S.


46

Operations and Maintenance Costs Varied By Project Age and Commercial Operations Date

Capacity-weighted average 2000-13 O&M costs for projects built in the 1980s equal $34/MWh, dropping to $23/MWh for projects built in 1990s, to $10/MWh for projects built in the 2000s, and to $9/MWh for projects built since 2010 Note: Sample is limited, and consists of 152 wind projects totaling 10,679 MW; few projects in sample have complete records of O&M costs from 2000-13; O&M costs reported here DO NOT include all operating costs

0

10

20

30

40

50

60

70

80

90

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12


Projects with no 2013 O&M data

Projects with 2013 O&M data

Ave

rage

An

nu

al O

&M

Co

st 2

00

0-2

01

3

(20

13

$/M

Wh

)

47

Operations and Maintenance Costs Varied By Project Age and Commercial Operations Date

Note: Sample size is extremely limited

O&M reported in figure does not include all operating costs: Statements

from public companies with large U.S. wind asset bases report total operating

costs in 2013 for projects built in the 2000s of ~$24/MWh

0

5

10

15

20

25

30

35

40

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Project Age (Number of Years Since Commercial Operation Date)

1998-2004

2005-2008

2009-2012

Commercial Operation Date:

n=

18

Me

dia

n A

nn

ua

l O

&M

Co

st

(20

13

$/M

Wh

)

n=

23

n=

20

n=

9

n=

25

n=

11

n=

5

n=

31

n=

25

n=

23

n=

25

n=

25

n=

8

n=

2n

=4

n=

5

n=

3

n=

29

n=

17

n=

12

n=

5

n=

3

n=

4

n=

4

n=

4

n=

4

48

Wind Power Price Trends

49

Sample of Wind Power Prices

• Berkeley Lab collects data on historical wind power sales prices, and long-term PPA prices

• PPA sample includes 343 contracts totaling 29,632 MW from projects built from 1998-2013, or planned for installation in 2014 or 2015

• Prices reflect the bundled price of electricity and RECs as sold by the project owner under a power purchase agreement

– Dataset excludes merchant plants and projects that sell renewable energy certificates (RECs) separately

– Prices reflect receipt of state and federal incentives (e.g., the PTC or Treasury grant), as well as various local policy and market influences; as a result, prices do not reflect wind energy generation costs

50

Wind PPA Prices Have Reached All-Time Lows

$0

$20

$40

$60

$80

$100

$120

Jan

-96

Jan

-97

Jan

-98

Jan

-99

Jan

-00

Jan

-01

Jan

-02

Jan

-03

Jan

-04

Jan

-05

Jan

-06

Jan

-07

Jan

-08

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

PPA Execution Date

Interior (18,178 MW, 192 contracts)

West (7,124 MW, 72 contracts)

Great Lakes (3,044 MW, 42 contracts)

Northeast (1,018 MW, 25 contracts)

Southeast (268 MW, 6 contracts)

Lev

eli

zed

PP

A P

rice

(2

01

3 $

/MW

h)

75 MW

150 MW 50 MW

51

A Smoother Look at the Time Trend Shows Steep Recent Decline in Pricing; Especially Low Pricing in Interior Region

52

Relative Competitiveness of Wind Improved in 2013: Comparison to Wholesale Prices

• Wholesale price range reflects flat block of power across 23 pricing nodes across the U.S.

• Recent wholesale prices reflect low natural gas prices, driven by weak economy and shale gas

• Price comparison shown here is far from perfect – see full report for caveats

0

10

20

30

40

50

60

70

80

90

100

20039

570

200413

547

200517

1,643

200630

2,311

200726

1,781

200839

3,465

200949

4,048

201048

4,642

201138

3,980

201213

970

201318

2,761

20

13

$/M

Wh

Nationwide Wholesale Power Price Range (by calendar year)

Generation-Weighted Average Levelized Wind PPA Price (by year of PPA execution)

Wind project sample includes projects with PPAs signed from 2003-2013

PPA year:

Contracts:

MW:

53

Comparison Between Wholesale Prices and Wind PPA Prices Varies by Region

Notes: Wind PPAs

included are those

signed from 2011-

2013. Within a

region there are a

range of wholesale

prices because

multiple price hubs

exist in each area;

price comparison

shown here is far

from perfect – see

full report for

caveats Wind PPA prices most competitive with wholesale prices in the

Interior region

0

10

20

30

40

50

60

70

80

90

100


Great Lakes11 projects

809 MW

Northeast3 projects210 MW


Total US69 projects7,711 MW

Average 2013 Wholesale Power Price Range

Individual Project Levelized Wind PPA Price

Generation-Weighted Average Levelized Wind PPA Price

Wind project sample includes projects with PPAs signed in 2011-2013

20

13

$/M

Wh

54

Recent Wind Prices Are Hard to Beat: Competitive with Expected Future Cost of Burning Fuel in Natural Gas Plants

0

10

20

30

40

50

60

70

80

90

100

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

20

36

20

37

20

38

20

39

20

40

Range of AEO14 gas price projections AEO14 reference case gas price projection Wind 2011 PPA execution (3,980 MW, 38 contracts) Wind 2012 PPA execution (970 MW, 13 contracts) Wind 2013 PPA execution (2,761 MW, 18 contracts)

20

13

$/M

Wh

Price comparison shown here is far from perfect – see full report for caveats

55

Renewable Energy Certificate (REC) Prices Remain High in Northeast

REC prices vary by: market type (compliance vs. voluntary);

geographic region; specific design of state RPS policies

$0

$5

$10

$15

$20

Ja

n-0

5

Ja

n-0

6

Ja

n-0

7

Ja

n-0

8

Ja

n-0

9

Ja

n-1

0

Ja

n-1

1

Ja

n-1

2

Ja

n-1

3

Ja

n-1

4

Low-Price REC Markets

DC Tier 1 MD Tier 1OH Out-of-State PA Tier 1TX Voluntary Wind (National)Voluntary Wind (West)

$0

$20

$40

$60

$80

Ja

n-0

5

Ja

n-0

6

Ja

n-0

7

Ja

n-0

8

Ja

n-0

9

Ja

n-1

0

Ja

n-1

1

Ja

n-1

2

Ja

n-1

3

Ja

n-1

4

High-Price REC Markets

CT Class I DE Class I IL Wind

MA Class I ME New NH Class I

NJ Class I OH In-State RI New

20

13

$/M

Wh

56

Policy and Market Drivers

57

Availability of Federal Incentives for Wind Projects Built in the Near Term Has Helped Restart the Domestic Market, but Policy Uncertainty Persists • Near-term availability of the PTC/ITC for those projects that reached

the “under construction” milestone by the end of 2013 has helped restart the domestic market and should enable solid growth at least through 2015

• Little action in 2013 on what are among the wind industry’s two highest priorities: a longer-term extension of federal tax incentives and passage of a federal renewable or clean energy portfolio standard

• Prospective impacts of more-stringent EPA environmental regulations, including those related to power-sector carbon emissions, may create new markets for wind energy

58

State Policies Help Direct the Location and Amount of Wind Development, but Current Policies Cannot Support Continued Growth at Recent Levels

• 29 states and D.C.

have mandatory

RPS

• State RPS’ can

support ~3-4 GW/yr

of renewable

energy additions on

average through

2025 (less for wind

specifically)

Non-Binding Goal

Source: Berkeley Lab

WI: 10% by 2015

NV: 25% by 2025

TX: 5,880 MW by 2015

PA: 8.5% by 2020

NJ: 22.5% by 2020CT: 23% by 2020

MA: 11.1% by 2009 +1%/yr

ME: 40% by 2017

NM: 20% by 2020 (IOUs)

10% by 2020 (co-ops)

CA: 33% by 2020

MN: 26.5% by 2025

Xcel: 31.5% by 2020

IA: 105 MW by 1999

MD: 20% by 2022

RI: 16% by 2019

HI: 40% by 2030

AZ: 15% by 2025

NY: 30% by 2015

CO: 30% by 2020 (IOUs)

20% by 2020 (co-ops)

10% by 2020 (munis)

MT: 15% by 2015

DE: 25% by 2025

DC: 20% by 2020

WA: 15% by 2020

NH: 24.8% by 2025

OR: 25% by 2025 (large utilities)

5-10% by 2025 (smaller utilities)

NC: 12.5% by 2021 (IOUs)

10% by 2018 (co-ops and munis)

IL: 25% by 2025

Mandatory RPS

VT: 20% by 2017ND: 10% by 2015

VA: 15% by 2025MO: 15% by 2021

OH: 12.5% by 2024

SD: 10% by 2015

UT: 20% by 2025

MI: 10% by 2015

KS: 20% of peak

demand by 2020

OK: 15% by 2015

AK: 50% by 2025

59

Solid Progress on Overcoming Transmission Barriers Continued • 3,500 circuit miles of new transmission built in 2013; completion of the

Competitive Renewable Energy Zones project in Texas

• EEI has identified over 170 transmission projects in development, 76% of which would – at least in part – support the integration of renewable energy

• AWEA has identified 15 near-term transmission projects that – if all were completed – could carry almost 60 GW of additional wind power capacity

• FERC continued to implement

Order 1000, requiring public

utility transmission providers to

improve planning processes

and determine a cost allocation

methodology for new

transmission investments

60

System Operators Are Implementing Methods to Accommodate Increased Penetrations of Wind

Notes: Because methods vary and a consistent set of operational impacts has not been included

in each study, results from the different analyses of integration costs are not fully comparable.

There has been some recent literature questioning the methods used to estimate wind integration

costs and the ability to disentangle those costs explicitly, while also highlighting the fact that other

generating options also impose integration challenges and costs to electricity systems

Integrating wind

energy into

power systems

is manageable,

but not free of

additional costs

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20

0% 10% 20% 30% 40% 50% 60% 70%

Inte

gra

tion

Co

st ($

/MW

h)

Wind Penetration (Capacity Basis)

APS (2007)

Avista (2007)

BPA (2009) [a]

BPA (2011) [a]

BPA (2013)

CA RPS (2006) [b]

ERCOT (2012)

EWITS (2010)

Idaho Power (2007)

Idaho Power (2012)

MN-MISO (2006) [c]

Nebraska (2010)

NorthWestern (2012)

Pacificorp (2005)

Pacificorp (2007)

PacifiCorp (2010)

PacifiCorp (2012)

Portland GE (2011)

Portland GE (2013)

Puget Sound Energy (2007)

SPP-SERC (2011)

We Energies (2003)

Xcel-MNDOC (2004)

Xcel-PSCo (2006)

Xcel-PSCo (2008)

Xcel-PSCo (2011) [d]

Xcel-UWIG (2003)

61

Future Outlook

62 62

Relatively Strong Wind Power Capacity Additions Anticipated for 2014 and 2015, then Uncertainty in 2016 and Beyond

Forecasts for Annual U.S. Wind Additions (MW)

Source 2014 2015 2016 Notes

Bloomberg NEF (2014c) 6,000 9,000 3,600 Assumes no PTC extension beyond current law

IHS EER (2014) 4,800 7,300 8,400 Assumes one PTC extension for 2016

Navigant (2014) 6,300 6,000 2,800 Presumably assumes no PTC in 2016

MAKE Consulting (2014) 6,400 6,600 5,100 Assumes one PTC extension for 2016

EIA (2014b) 4,400 9,100 na Assumes no PTC extension beyond current law

The upper end of the forecast range for 2014 and for 2015 does not

approach the record build level achieved in 2012

63 63

Current Low Prices for Wind Energy, Future Technological Advancement and New EPA Regulations May Support Higher Growth in Future, but Headwinds Include… • Lack of clarity about fate of federal tax incentives

• Continued low natural gas and wholesale electricity prices

• Modest electricity demand growth

• Limited near-term demand from state RPS policies

• Inadequate transmission infrastructure in some areas

• Growing competition from solar in some regions

64

64

U.S. Is on Early Trajectory that May Lead to 20% Wind; Projections for 2014-2016, However, Fall Short of Annual Growth Envisioned in 2008 20% Wind Report

0

35

70

105

140

175

210

245

280

315

0

2

4

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07

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20

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Deployment Path in 20% Wind Report (annual)

Actual Wind Installations (annual)

Deployment Path in 20% Wind Report (cumulative)

Actual Wind Installations (cumulative)

An

nu

al C

ap

aci

ty (

GW

)

range of annual projections

Cu

mu

lati

ve C

ap

aci

ty (

GW

)

65 65

Conclusions • Annual wind additions were modest in 2013, but signals point to more-

robust growth in 2014/15

• Notwithstanding 2013, wind has been a significant source of new

generation in the U.S. since 2007

• Supply chain has been under duress, but domestic manufacturing

content for nacelle assembly, blades, and towers is strong

• Turbine scaling is boosting expected wind project performance, while

the installed cost of wind is on the decline

• Trends are enabling very aggressive wind power pricing and solid

economics in many regions despite low natural gas prices

• Growth after 2015 remains uncertain, dictated in part by future natural

gas prices, fossil plant retirements, and policy decisions, though

technological advancements and recent declines in the price of wind

energy have boosted future growth prospects

66

For More Information... See full report for additional findings, a discussion of the sources of data used, etc.

• http://energy.gov/eere/wind/wind-program

To contact the primary authors • Ryan Wiser, Lawrence Berkeley National Laboratory

510-486-5474, [email protected]

• Mark Bolinger, Lawrence Berkeley National Laboratory 603-795-4937, [email protected]

Berkeley Lab’s contributions to this report were funded by the Wind & Water Power Technologies Office, Office of Energy Efficiency and Renewable Energy of the U.S. Department of Energy under Contract No. DE-AC02-05CH11231. The authors are solely responsible for any omissions or errors contained herein.

wind and water power technologies officeenergy.gov/sites/prod/files/2014/08/f18/2013 wind...

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