By Tom Kiernan, CEO AWEA
Falling costs, favorable long-term policy certainty and a diverse group of customers are creating a watershed moment for U.S. wind energy. Wind is rapidly becoming America’s fastest-growing source of electricity, acting as a leading carbon-cutting solution for our nation’s power grid.
The five-year extension in December of the renewable energy Production Tax Credit and alternative Investment Tax Credit will allow American wind power to continue its recent record of success. The incentives have spurred technological advances and improved domestic manufacturing, so wind-generated electricity now costs two-thirds less than it did just six years ago. The renewal of the tax credits means U.S. wind now has a business environment primed for expansion through the 2020s, when the new Clean Power Plan will kick in and require further carbon cutting, for which wind is the low-cost solution.
2015 in Review
2015’s fourth quarter results are a clear indicator of U.S. wind power’s health.
It was the second-strongest quarter ever, and more new wind power was installed than in all of 2014 combined.
This good news is evident in state-level results as well. Iowa leads the U.S., getting nearly 30 percent of all its electricity from wind turbines, while Texas remains on top with roughly a quarter of all wind generation in the country. New Mexico gained membership in the “Gigawatt Club,” becoming the seventeenth state more than 1,000 MW of wind generation online. Connecticut become the latest state to have a utility-scale wind project, leaving only 10 states that don’t yet have one (mostly in the South, where onshore wind speeds are slower).
This growth is likely to continue well into 2016, as close to 100 more projects worth of wind power remain under construction, with another half as much in the advanced stages of development.
For 2015 overall, more than 8,500 megawatts of new U.S. wind generation capacity were installed, a 77 percent increase over 2014 and the third-best year in history. One tally from SNL Energy found that wind made up roughly 47 percent of all new U.S. electricity in 2015, well ahead of natural gas and far outstripping solar at 14 percent.
In December, U.S. wind surpassed 70 gigawatts of installed wind generation capacity. That’s enough to power 19 million typical American homes, or with a year’s generation, to drive 26 million electric cars around the world.
New Customers Mean New Opportunities
Over the last two years what the industry calls non-traditional purchasers – buyers other than electric utilities – have become some of American wind power’s biggest new customers, creating an entirely new sector of demand.
Cities from Aspen, CO to Austin, TX and major industrial companies such as Procter & Gamble, Dow Chemical, and General Motors, have signed power purchase agreements (PPAs) to source affordable, clean electricity from wind. Wind both helps these buyers meet their sustainability goals while also providing long-term protection from conventional fuel price spikes. In 2015’s fourth quarter, 75 percent of the new power contracts came from these non-utility buyers.
This is not to say that utilities have abandoned wind. They continued to buy multiple projects’ worth in the fourth quarter, and more are on the drawing boards.
Clean Power Plan on the Horizon
This rapid growth, combined with wind’s falling costs, means wind power is well suited to help states comply with the Clean Power Plan, the nation’s first rule designed to reduce carbon pollution from the electric power sector.
Analysis from the Energy Information Administration finds that wind is the lowest-cost compliance solution to the plan. It was the most affordable option in over a dozen of the scenarios the agency examined, and it made up 57 percent of the economically optimal mix.
Research by the Rhodium Group confirms these findings. The tax credits’ extension is a major reason why renewables are “the technolog(ies) of choice for the entire [Clean Power Plan] compliance period,” its January 2016 report states. As illustrated, the extension shifts the energy mix to comply with the plan from natural gas to renewable energy – the vast majority of which will come from wind.
Evidence abounds that wind energy is the lowest-cost method to reduce carbon emissions. Both the Lawrence Berkeley National Laboratory and Wall Street investment firm Lazard, Inc. have confirmed the cost declines of over 60 percent since 2009. Lazard further notes that wind energy is by far the lowest-cost energy source for reducing emissions, even without tax incentives.
As more wind comes online, it will save consumers even more money by saving fossil fuels for later. The Department of Energy’s Wind Vision (DOE) report finds electricity prices are 20 percent less sensitive to changes in natural gas prices, for example, in scenarios with large amounts of wind energy.
We saw a real-world example of these savings during 2014’s polar vortex weather event, when wind saved consumers over $1 billion in just two days according to AWEA’s analysis.
More Wind, More Jobs
All of this growth means that wind energy will continue to support thousands of well-paying American jobs. Today, U.S. wind provides 73,000 well-paying jobs, but that number could grow to 380,000 jobs under the DOE’s scenario of 20 percent of U.S. electricity coming from wind by 2030.
The Department of Labor recently found “wind turbine technician” to be the country’s fastest-growing occupation, expected to increase 108 percent over the next 10 years. There are also 500 factories in 43 states that build wind-related parts and materials, an important source of U.S. manufacturing jobs.
Obstacles to growth start with transmission. Today, most of the best wind resources are in rural areas with small populations. Infrastructure upgrades are needed to make America’s grid smarter and safer. More clean energy superhighways like the Competitive Renewable Energy Zone lines in West Texas are needed to deliver clean, affordable wind-generated electricity to major population centers that need it most.
A January 2016 study by the Southwest Power Pool found that these upgrades are smart investments: a $3.4 billion investment by the grid operator in transmission improvements is expected to result in $16.6 billion in benefits over the life of the project.
New transmission projects from Clean Line Energy and the Interwest Energy Alliance will each carry as much clean, reliable wind-generated electricity as four Hoover Dams. When it was constructed, the Hoover Dam was an engineering marvel, proof of our technological prowess and a symbol of vast progress.
Today, we can say the same thing about wind power. One turbine at a time, we’re re-shaping American energy.
Bio: Tom Kiernan began as CEO of the American Wind Energy Association in May, 2013. Prior to joining AWEA, Tom was President of the National Parks Conservation Association for 15 years growing it from 8 to 22 offices and overseeing a successful $125 million capital campaign. Previous positions include Deputy Assistant Administrator of EPA’s Office of Air and Radiation where he assisted in leading the implementation of the 1990 Clean Air Act Amendments, President of the Audubon Society of New Hampshire, and a senior consultant with Arthur Andersen & Co. Tom is a native of Arlington, Va., has an undergraduate degree from Dartmouth College in Environmental Computer Modeling, and an MBA from Stanford’s Graduate School of Business.