2013 wind technologies market report presentation

Page 1

WIND AND WATER POWER TECHNOLOGIES OFFICE

August 20, 2014 1


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

2


Report Contents • Installation trends • Industry trends

• Technology trends • Performance trends

• Cost trends • Wind power price trends • Policy & market drivers • Future outlook 3


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

4


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 5


Installation Trends

6


2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

Cumulative U.S. Capacity (right scale)

70 65 60 55 50 45 40 35 30 25 20 15 10 5 0

Cumulative Capacity (GW)

Annual U.S. Capacity (left scale)

1999

14 13 12 11 10 9 8 7 6 5 4 3 2 1 0

1998

Annual Capacity (GW)

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

• 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 7


Wind Represented 7% of ElectricGenerating Capacity Additions in 2013

West

Interior

Great Lakes

Northeast

Southeast

But‌ from 2007-2013, wind represented 33% of capacity additions nationwide, and a much higher proportion in some regions 8


The U.S. Fell to 6th Place in Annual Wind Power Capacity Additions Annual Capacity (2013, MW) China Germany India United Kingdom Canada United States Brazil

Poland Sweden Romania Rest of World TOTAL

16,088 3,237 1,987 1,833 1,599 1,087 948 894 724 695 7,045 36,137

Cumulative Capacity (end of 2013, MW) China 91,460 United States 61,110 Germany 34,468 Spain 22,637 India 20,589 United Kingdom 10,946 Italy 8,448 France 8,128 Canada 7,813 Denmark 4,747 Rest of World 51,031 TOTAL 321,377

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

• Led by decline in U.S. market, global additions 20% lower in 2013 • U.S. remains a distant second to China in cumulative capacity 9


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 10


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. 11


California Installed the Most Capacity in 2013; 9 States Exceed 12% Wind Energy Percentage of In-State Generation

Installed Capacity (MW) Annual (2013) California Kansas Michigan Texas New York Nebraska Iowa Colorado Ohio Massachusetts Alaska North Dakota Indiana Puerto Rico

Rest of U.S.

TOTAL

269 254 175 141 84 75 45 32 3 3 3 2 1 1

0

1,087

Cumulative (end of 2013) Texas 12,354 California 5,829 Iowa 5,177 Illinois 3,568 Oregon 3,153 Oklahoma 3,134 Minnesota 2,987 Kansas 2,967 Washington 2,808 Colorado 2,332 New York 1,722 North Dakota 1,681 Indiana 1,544 Wyoming 1,410 Pennsylvania 1,340 Michigan 1,163 Idaho 973 South Dakota 783 New Mexico 778 Montana 645 Rest of U.S. 4,762

Actual (2013)* Iowa 27.4% South Dakota 26.0% Kansas 19.4% Idaho 16.2% Minnesota 15.7% North Dakota 15.6% Oklahoma 14.8% Colorado 13.8% Oregon 12.4% Wyoming 8.4% Texas 8.3% Maine 7.4% California 6.6% Washington 6.2% New Mexico 6.1% Montana 6.0% Hawaii 5.1% Nebraska 4.8% Illinois 4.7% Vermont 3.4% Rest of U.S. 0.8%

TOTAL

TOTAL

61,110

* Based on 2013 wind and total generation by state from EIA’s Electric Power Monthly. Source: AWEA project database, EIA

12

4.1%

• 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%)


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

13


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 14


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. 15


Industry Trends

16


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

100%

Other

90%

Suzlon

80%

Acciona

70%

Clipper

60%

Nordex

50%

Mitsubishi

40%

REpower

30%

Gamesa

20%

Vestas

10%

Siemens

0%

GE Wind 2005

2006

2007

2008

2009

2010

2011

2012

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 17


Manufacturing Supply Chain Experienced Substantial Growing Pains • 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

Note: map is not intended to be exhaustive

18

• Wind related jobs declined from 80,700 in 2012 to 50,500 in 2013


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

19


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

20


Sharp Decline in Wind-Related Imports and Stable Exports in 2013 U.S. is a net importer of wind equipment

* estimated imports

Exports of windpowered generating sets increased modestly in 2013 to $421 billion; no ability to track other windspecific exports, but total tower exports equalled $129 million

• Figure only includes selected, tracked trade categories; misses other windrelated imports • See full report for the many assumptions used to generate this figure 21

21


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. 22


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 23


Despite Supply Chain Challenges, a Growing Amount of the Equipment Used in U.S. Wind Projects Has Been Sourced presented as a fraction of Domestically since 2006-07 When equipment-related turbine costs, the 100% 80%

Domestic Wind Equipment and Untracked Imports

60% 40%

Tracked Imports of Wind Equipment

combined import share of tracked wind equipment (i.e., blades, towers, generators, gearboxes, and windpowered generating sets) has declined from nearly 80% in 20062007 to ~30% in 2012-2013. See report for the assumptions used to generate these figures

20% 0%

2006-2007

2008-2009

2010-2011

2012-2013

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

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% 24


The Project Finance Environment Held Steady in 2013 12% 10% Tax Equity Yield (after-tax)

8%

15-Year Debt Interest Rate (pre-tax)

6%

4% 15-Year Debt Interest Rate (after-tax)

2%

0% Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

• 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 25


100%

100%

90%

90%

80%

80%

70%

70%

60%

60%

50%

50%

40%

2013

2012

2011

2010

2009

2008

2007

10%

2006

Independent Power Producer (IPP) 2005

10%

2004

20%

2003

Investor-Owned Utility (IOU)

2002

20%

2001

30%

2000

Publicly Owned Utility (POU)

1999

30%

0%

2013 Capacity by Owner Type

IPP: 1,030 MW (95%)

40%

Other

1998

% of Cumulative Installed Capacity

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

0%

POU: 2 MW (0%)

IOU: 45 MW (4%)

Other: 11 MW (1%)

New utility ownership continued to languish for the second year in a row, at just 4% of the 2013 wind capacity additions 26


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

27 27


Technology Trends

28


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

29


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

Hub Height

30


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

Specific Power by IEC Class 2 & 3

IEC Class

31


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

32

By Wind Resource Quality


Performance Trends

33


40%

1.20

35%

1.05

30%

0.90

25%

0.75

20%

0.60

15%

0.45

10% 5%

0% Year: 2000 # Projects: 10 # MW: 591

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) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 30 73 84 106 129 153 196 240 339 452 516 601 582 943 2,682 3,128 4,500 5,142 7,967 9,951 14,926 23,617 33,381 38,562 44,599 57,157

0.30 0.15

Long-Term Wind Resource Index

Sample-Wide Capacity Factor

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

0.00

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). 34


Wind Curtailment Is Substantial, but Has Generally Declined in Recent Years Estimated Wind Curtailment (GWh and % of potential wind generation) Electric Reliability Council of Texas (ERCOT) Southwestern Public Service Company (SPS) Public Service Company of Colorado (PSCo) Northern States Power Company (NSP) Midwest Independent System Operator (MISO), less NSP Bonneville Power Administration (BPA) New York Independent System Operator (NYISO) PJM Total Across These Eight Areas:

2007 109 (1.2%) N/A N/A N/A

2008 1,417 (8.4%) 0 (0.0%) 2 (0.1%) 25 (0.9%)

2009 3,872 (17.1%) 0 (0.0%) 19 (0.6%) 42 (1.7%) 250 (2.0%)

2010 2,067 (7.7%) 0.9 (0.0%) 82 (2.2%) 44 (1.7%) 780 (4.2%) 5* (0.1%)

2011 2,622 (8.5%) 0.5 (0.0%) 64 (1.4%) 59 (1.6%) 792 (3.4%) 129* (1.4%)

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

109 (1.2%)

1,444 (5.7%)

4,183 (9.7%)

2,978 (4.9%)

3,665 (5.0%)

2012 1,175 (3.8%)

2013 363 (1.2%)

N/A**

N/A**

115(e) (2.0%) 125 (3.0%) 724 (2.5%) 71* (0.7%) 9 (0.3%) 125# (2.0%)# 2,345 (2.6%)

112(e) (1.7%) 284 (5.9%) 1,470 (4.6%) 6* (0.1%) 50 (1.4%) 284 (1.9%) 2,569 (2.5%)

In areas where curtailment has been particularly problematic in the past – principally in Texas – steps taken to address the issue have born fruit

35

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


2013 Capacity Factor (by project vintage)

Even Controlling for These Factors, Average Capacity Factors for Projects Built After 2005 Have Been Stagnant 60%

Weighted Average (by project vintage) Individual Project (by project vintage)

50% 40% 30%

20% 10%

0% Vintage: 1998-99 2000-01 2002-03 2004-05 27 38 28 # projects: 25 1,765 1,988 3,651 # MW: 921 36

Sample includes 582 projects totaling 57.2 GW 2006 22 1,739

2007 38 5,284

2008 80 8,522

2009 95 9,426

2010 48 4,733

2011 66 5,760

2012 115 13,368


100

400

95

350

90

300

85

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

Average Specific Power (W/m^2)

Index of Wind Resource Quality at 80m (1998-99=100)

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

Average Specific Power Among Built Projects (right scale) 80

1998-99 2000-01 2002-03 2004-05 2006 2007 2008 2009 Commercial Operation Date

2010

2011

2012

2013

200

All else equal: • Drop in average specific power will boost capacity factors • Building projects in lower wind resource sites will hurt capacity factors 37


Weighted Average Capacity Factor in 2013

Controlling for Wind Resource Quality and Specific Power Demonstrates Impact of Turbine Evolution 50% 45%

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

40% 35% 30% 25% 20%

15% 10% 5% 0%

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) Lower Medium Higher 124 projects, 9.1 GW 146 projects, 16.5 GW 196 projects, 23.4 GW

Highest 75 projects, 7.3 GW

Wind Resource Quality

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 38


Controlling for Wind Resource Quality and Commercial Operation Date Demonstrates Impact of Turbine Evolution Weighted Average 2013 Capacity Factor

50% 45% 40%

Highest Higher Medium Lower

35% 30% 25% 20% 15% 10% 5% 0%

1998-99 2000-01 2002-03 2004-05 2006 2007 2008 Project Vintage

2009

2010

2011

2012

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 39


Regional Variations in Capacity Factors Reflect the Strength of the Wind Resource and Adoption of New Turbine Technology 2013 Capacity Factor

60%

50%

Weighted Average (by region) Weighted Average (total U.S.) Individual Project (by region)

40% 30% 20%

10% Sample includes 113 projects built in 2012 and totaling 13.2 GW 0%

40

West 29 projects 3,665 MW

Northeast 14 projects 1,053 MW

Great Lakes 15 projects 1,823 MW

Interior 55 projects 6,703 MW


Cost Trends

41


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

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

• 42

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


Reported Installed Project Costs Continued to Trend Lower in 2013 Installed Project Cost (2013 $/kW)

6,000 5,000

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

Capacity-Weighted Average Project Cost

4,000 3,000

2,000 1,000

1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

0 Commercial Operation Date

• 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 43


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

Installed Project Cost (2013 $/kW)

4,500

Capacity-Weighted Average Project Cost

4,000

Individual Project Cost

3,500

3,000 2,500 2,000

Project Size

1,500 1,000

500 0

Sample includes projects built in 2012-2013 ≤5 MW 87 MW 41 projects

5-20 MW 155 MW 13 projects

20-50 MW 721 MW 20 projects

50-100 MW 1,411 MW 18 projects

100-200 MW 3,860 MW 29 projects

>200 MW 3,973 MW 15 projects

Installed Project Cost (2013 $/kW)

4,500

3,500 3,000 2,500

Turbine Size

2,000 1,500 1,000 500 0

44

Sample includes projects built in 2012-2013

4,000

Capacity-Weighted Average Project Cost Individual Project Cost >0.1 & <1 MW 11 MW 10 projects

≥1 & <2 MW 4,720 MW 62 projects

≥2 & <3 MW 4,656 MW 53 projects

≥3 MW 819 MW 11 projects


Some Regional Differences in Average Wind Power Project Costs Are Apparent Installed Project Cost (2013 $/kW)

4,500 Sample includes projects built in 2012-2013

4,000 3,500 3,000

2,500 2,000 1,500 1,000

Capacity-Weighted Average Project Cost Individual Project Cost Capacity-Weighted Average Cost, Total U.S.

500

0

Interior 53 projects 4,480 MW

Northeast 33 projects 1,191 MW

Great Lakes 23 projects 1,534 MW

West 26 projects 2,982 MW

Southeast 1 project 19 MW

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 45


90

Projects with no 2013 O&M data

80

Projects with 2013 O&M data

70 60 50 40

30 20 10

0 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Average Annual O&M Cost 2000-2013 (2013 $/MWh)

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

Commercial Operation 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 46


Operations and Maintenance Costs Varied By Project Age and Commercial Operations Date 35

Commercial Operation Date: 1998-2004 2005-2008

30

2009-2012

25 20 15

1

2

3

4

5

6

7

8

9

10

11

Project Age (Number of Years Since Commercial Operation Date)

12

13

n=4

n=4

n=4

n=4

n=3

n=5

n=4 n=2

0

n=3 n=5

5

n=5 n=11

10 n=18 n=23 n=29 n=31 n=25 n=17 n=23 n=25 n=12 n=20 n=25 n=9 n=8 n=25

Median Annual O&M Cost (2013 $/MWh)

40

14

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 47


Wind Power Price Trends

48


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 49


Wind PPA Prices Have Reached All-Time Lows 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)

$100 $80

150 MW

$40 $20

75 MW

Jan-14

Jan-13

Jan-12

Jan-11

Jan-10

Jan-09

Jan-08

Jan-07

Jan-06

Jan-05

Jan-04

Jan-03

Jan-02

Jan-01

Jan-00

Jan-99

Jan-98

Jan-97

$0

PPA Execution Date 50

50 MW

$60

Jan-96

Levelized PPA Price (2013 $/MWh)

$120


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

51


Relative Competitiveness of Wind Improved in 2013: Comparison to Wholesale Prices 100

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

90 80

2013 $/MWh

70 60 50 40 30 20 10 0

Nationwide Wholesale Power Price Range (by calendar year) Generation-Weighted Average Levelized Wind PPA Price (by year of PPA execution)

PPA year: 2003 Contracts: 9 MW: 570

2004 13 547

2005 17 1,643

2006 30 2,311

2007 26 1,781

2008 39 3,465

2009 49 4,048

2010 48 4,642

2011 38 3,980

2012 13 970

2013 18 2,761

• 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 52


Comparison Between Wholesale Prices and Wind PPA Prices Varies by Region Average 2013 Wholesale Power Price Range

90

Individual Project Levelized Wind PPA Price

80

Generation-Weighted Average Levelized Wind PPA Price

2013 $/MWh

100

70 60 50 40 30 20

10 0

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

Interior 44 projects 5,648 MW

Great Lakes 11 projects 809 MW

Northeast 3 projects 210 MW

West 11 projects 1,044 MW

Total US 69 projects 7,711 MW

Notes: Wind PPAs included are those signed from 20112013. 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 53


Recent Wind Prices Are Hard to Beat: Competitive with Expected Future Cost of Burning Fuel in Natural Gas Plants 100

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)

90

2013 $/MWh

80 70 60 50

40 30

20 10 2040

2039

2038

2037

2036

2035

2034

2033

2032

2031

2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

0

Price comparison shown here is far from perfect – see full report for caveats 54


Renewable Energy Certificate (REC) Prices Remain High in Northeast High-Price REC Markets

Low-Price REC Markets

REC prices vary by: market type (compliance vs. voluntary); geographic region; specific design of state RPS policies 55

Jan-14

Jan-13

Jan-12

MD Tier 1 PA Tier 1 Voluntary Wind (National)

Jan-10

Jan-09

Jan-08

Jan-07

Jan-05

Jan-14

Jan-13

$0

Jan-12

$0

Jan-11

$5

Jan-10

$20

Jan-09

$10

Jan-08

$40

Jan-07

$15

Jan-06

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

IL Wind NH Class I RI New

$60

Jan-05

2013$/MWh

DE Class I ME New OH In-State

Jan-11

$20 CT Class I MA Class I NJ Class I

Jan-06

$80


Policy and Market Drivers

56


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 57


State Policies Help Direct the Location and Amount of Wind Development, but Current Policies Cannot Support Continued Growth at Recent Levels WA: 15% by 2020 MT: 15% by 2015

MN: 26.5% by 2025 Xcel: 31.5% by 2020

ME: 40% by 2017

NH: 24.8% by 2025 ND: 10% by 2015 OR: 25% by 2025 (large utilities) 5-10% by 2025 (smaller utilities)

MI: 10% by 2015

VT: 20% by 2017

NY: 30% by 2015 SD: 10% by 2015 WI: 10% by 2015 PA: 8.5% by 2020

NV: 25% by 2025

IA: 105 MW by 1999

NJ: 22.5% by 2020

UT: 20% by 2025 KS: 20% of peak IL: 25% by 2025 OH: 12.5% by 2024 demand by 2020 CO: 30% by 2020 (IOUs) 20% by 2020 (co-ops) 10% by 2020 (munis)

CA: 33% by 2020

AZ: 15% by 2025

MO: 15% by 2021 OK: 15% by 2015

NM: 20% by 2020 (IOUs) 10% by 2020 (co-ops)

MD: 20% by 2022

MA: 11.1% by 2009 +1%/yr RI: 16% by 2019 CT: 23% by 2020

DE: 25% by 2025 DC: 20% by 2020 VA: 15% by 2025

NC: 12.5% by 2021 (IOUs) 10% by 2018 (co-ops and munis)

AK: 50% by 2025 TX: 5,880 MW by 2015 HI: 40% by 2030

Source: Berkeley Lab

58

Mandatory RPS

Non-Binding Goal

• 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)


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 59


System Operators Are Implementing Methods to Accommodate Increased Penetrations of Wind $20

$18

$16 Integration Cost ($/MWh)

Integrating wind energy into power systems is manageable, but not free of additional costs

$14

$12

$10

$8

$6

$4

$2

$0 0%

10%

20%

30%

40%

50%

Wind Penetration (Capacity Basis)

60%

70%

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)

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 60


Future Outlook

61


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

Bloomberg NEF (2014c) IHS EER (2014) Navigant (2014) MAKE Consulting (2014) EIA (2014b)

6,000 4,800 6,300 6,400 4,400

9,000 7,300 6,000 6,600 9,100

3,600 8,400 2,800 5,100 na

Notes Assumes no PTC extension beyond current law Assumes one PTC extension for 2016 Presumably assumes no PTC in 2016 Assumes one PTC extension for 2016 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 62

62


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 63

63


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 18

315 280

14

245

12

210

10

175

8

140

6

105 Deployment Path in 20% Wind Report (annual)

4

Cumulative Capacity (GW)

Annual Capacity (GW)

range of annual projections 16

70

Actual Wind Installations (annual) 2

Deployment Path in 20% Wind Report (cumulative)

35

64

2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

Actual Wind Installations (cumulative)

0

0

64


Conclusions • Annual wind additions were modest in 2013, but signals point to morerobust 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 65

65


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, RHWiser@lbl.gov • Mark Bolinger, Lawrence Berkeley National Laboratory 603-795-4937, MABolinger@lbl.gov 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. 66


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