US wind power remains attractive with better performance and lower costs

The US Department of Energy (DOE) and the Lawrence Berkeley National Laboratory have recently released an annual report on the wind energy in the US.

According to the “Wind Technologies Market Report”, wind energy pricing in the country remains attractive to utility and commercial purchasers. Prices offered by newly built wind projects are averaging around US$0.02/kWh, driven lower by technology advancements and cost reductions.

“Wind energy prices—particularly in the central United States—are at rock-bottom levels, with utilities and corporate buyers selecting wind as the low-cost option,” said Berkeley Lab Senior Scientist Ryan Wiser. “Moreover, enabled by technology advancements, wind projects are economically viable in a growing number of locations throughout the United States.”

The US is the second country in the world in terms of installed wind capacity with 73,992 MW, after China with 145,053 MW. But the US is actually number one when it comes to actual wind electricity generated.

Wind power represented the largest source of US electric-generating capacity additions in 2015, with US$14.5 billion invested in 8.6 GW of new capacity.Wind power constituted 41% of all US generation capacity additions in 2015, up sharply from its 24% market share the year before and close to its all-time high.

Wind power currently meets about 5% of the nation’s electricity demand, and represents more than 10% of total electricity generation in twelve states, and more than 20% in three of those states. But this still puts US well behind leaders like Denmark (40% of their electricity comes from wind power), Portugal, Ireland, and Spain (between 20 and 30%).

But wind project performance is now being enhanced by bigger turbines. Since 1998-1999, the average capacity of wind turbines installed in the US has increased by 180% (to 2 MW in 2015), the average turbine hub height has increased by 47% (to 82 m), and the average rotor diameter has increased by 113% (to 102 m).

Moreover, turbines originally designed for lower wind speeds are now regularly deployed in higher wind speed sites, boosting project performance. Increased rotor diameters, in particular, have begun to dramatically increase wind project capacity factors. For example, the average 2015 capacity factor among projects built in 2014 reached 41%, compared to an average of 31% among projects built from 2004–2011 and 26% among projects built from 1998–2003.

Wind energy prices also remain very low because of lower installed project costs along with improvements in capacity factors (CF). After topping out at nearly US$0.07/kWh in 2009, the average levelized long-term price from wind power sales agreements has dropped to around US$0.02/kWh—though this nationwide average is dominated by projects that largely hail from the lowest-priced central region of the country.

Recently signed wind energy contracts compare favorably to projections of the fuel costs of gas-fired generation extending out through 2040. These low prices have spurred demand for wind energy, both from traditional electric utilities and also, increasingly, from non-utility purchasers like corporations, universities, and municipalities.

The manufacturing supply chain also continued to adjust to swings in domestic demand for wind equipment.

Wind sector employment reached a new high of 88,000 full-time workers at the end of 2015, and the profitability of turbine suppliers has generally rebounded over the last three years.

For wind projects recently installed in the United States, domestically manufactured content is highest for nacelle assembly (>85%), towers (80-85%), and blades and hubs (50-70%), but is much lower (<20%) for components internal to the nacelle.

Although there have been a number of recent manufacturing plant closures, each of the three major turbine manufacturers serving the US market has one or more domestic manufacturing facilities in operation.