Third Quarter US Wind Power Market Report Highlights

There are currently 20,798 MW of wind power capacity in various stages of construction in the US. That number is almost 23% of all wind turbines currently online in the US over decades of installations. Assuming an average turbine rating of 2.5 MW, this is around 8,319 separate wind turbines. Furthermore, there are 17,167 MW of wind power in advanced stages of development, and the combined total of 37,965 MW is a 28% year-over-year increase. These are among the more remarkable data points revealed in the US Wind Industry Third Quarter 2018 Market Report from the American Wind Energy Association. 

Policy Phaseout Construction Boom

The massive build up is the result expected from the long term phaseout of the Production Tax Credit (PTC), the wind industry’s favored incentive. The wind industry is essentially in a phase of overbuilding capacity while wind is “on sale,” so to speak. The phaseout is structured so wind plants that began construction by the end of 2016 will receive 100% PTC value, which is $23 per MWh for a 10-year period. Projects starting construction in 2017 will receive 80% of the PTC value, and the percentage will continue to decline through 2020 (2018: 60%; 2019: 40%; 2020: 0%). To add to this, the allowed construction window is 4 years, so projects on the tail end of the PTC window will be finishing construction through 2023.

New Construction in 2018

Other report highlights include 2018 installation rates of 612 MW in the third quarter, a 15% increase over the same quarter in 2017. This brings the year-to-date capacity to 1,644 MW. However, over 8,600 MW are likely to be online when final fourth quarter figures are tallied in early 2019. Construction follows a seasonal cycle, with the majority of project commissioning occurring in the fourth quarter (when construction wraps up before the cold winter months). In addition to new capacity, developers completed 329 MW of partial repowering across three projects in the third quarter. Repowering consists of major upgrades to older operating wind turbines, often with drivetrain and generator replacements and the addition of longer blades while utilizing the existing tower and foundation. 

Top Turbine Brands in 2018 so Far

Domestic heavyweight GE Renewable Energy represents 63% of the US wind turbine market in the first three quarters of 2018, while Denmark-based Vestas represents 26% and China-based Goldwind represents 10%. The capacity of wind turbines continues to increase; the majority of wind turbines are between 2 MW and 3 MW, with around 30% above 3 MW. Notably, the third quarter witnessed the entry of the first 4 MW onshore wind turbines in the US with orders announced by both Germany-based Senvion and Vestas. The latest arena in the ever-tightening wind turbine market is with onshore wind turbines in the 4 MW range, as detailed in a previous Guidehouse Insights blog.

Buy Wind Power While It Is On Sale

Ultimately, it is the procurement of new power that drives the market and now is the right time to buy. Utilities buy wind energy to add to electricity generation portfolios, almost always blended with other generation from traditional coal, natural gas, and other renewables like solar and hydroelectric. Wind project developers announced 2,467 MW of new power purchase agreements (PPAs) in the third quarter, bringing year-to-date activity to 7,550 MW. PPA activity in the first three quarters already exceeds total PPA volumes in each of the past 4 years. Corporate and other non-utility customers signed 38% (945 MW) of capacity contracts in the third quarter, including eight first time wind buyers. Through the first three quarters alone, 2018 is already the most active year for corporate and non-utility PPAs, surpassing the record previously set in 2015.