US Wind Installation and Industry Trends in 2017: Part 1

The US Department of Energy (DOE) recently published its 2017 edition of the annual Wind Technologies Market Report. The report is a perennial trove of data; I have split its key highlights into a three-part blog series. In this first part, I focus on installation and industry trends. The second blog will focus on technology and performance trends, and the third on turbine cost and power price trends.

Part 1: Installation and Industry Trends

Installation Trends

Wind power additions continued at a rapid pace in 2017, with 7,017 MW of new capacity added in the US and $11 billion invested. Supported by favorable tax policy and other factors, cumulative wind power capacity grew to 88,973 MW. In addition to this newly installed wind capacity, 2,131 MW of partial wind plant repowering was completed in 2017. This mostly involved upgrades to the rotor diameters and major nacelle components of existing turbines to increase energy production with more advanced turbine technology and extend project life while gaining access to favorable tax incentives.

Wind power represented the third-largest source of US electric-generating capacity additions in 2017, behind solar and natural gas. Wind power constituted 25% of all capacity additions in 2017. Over the last decade, wind represented 30% of all US capacity additions.

Texas installed the most capacity in 2017 with 2,305 MW, while 14 states exceeded 10% wind power penetration as a fraction of total in-state generation. New wind turbines were installed in 24 states in 2017. On a cumulative basis, Texas remained the leader, with 22,599 MW of capacity. Notably, the wind capacity installed in Iowa, Kansas, Oklahoma, and South Dakota supplied 30%-37% of all in-state electricity generation in 2017.

Industry Trends

Vestas, General Electric (GE), and Siemens Gamesa captured 88% of the US wind power market in 2017. In 2017, Vestas captured 35% of the US market for turbine installations, edging out GE at 29% and followed by Siemens-Gamesa Renewable Energy at 23%. Global and country-level market shares for all wind turbines are available in Guidehouse Insights’ report, World Wind Energy Market Update 2018.

Domestic wind sector employment reached a new high of 105,500 full-time workers in 2017. The domestic supply chain faces conflicting pressures, including significant near-term growth, as well as strong competitive pressures and an anticipation of reduced demand as the production tax credit is phased out.

Domestic manufacturing content is strong for some wind turbine components, but the US wind industry remains reliant on imports of wind equipment from a wide array of countries, with the level of dependence varying by component. Domestic manufacturing content is highest for nacelle assembly (>85%), towers (70%-90%), and blades and hubs (50%-70%).

The project finance environment remained strong in 2017. The US wind market raised $6 billion of new tax equity in 2017, on par with the 3 preceding years. Project-level debt finance decreased to $2.5 billion as more projects from larger developers were self-financed. Tax equity yields held at just below 8% (in unlevered, after-tax terms), while the cost of term debt hovered around 4% for much of the year.

Independent power producers (IPPs) own the majority of wind assets built in 2017. IPPs own 91% of the new wind capacity installed in the US in 2017, with the remaining assets owned by investor-owned utilities (9%) and other entities (<1%). Long-term contracted sales to utilities remained the most common off-take arrangement, but direct retail sales, merchant off-take arrangements, and large commercial and industrial purchases were significant.