WIND AND WATER POWER TECHNOLOGIES OFFICE
2014 Wind Technologies Market Report: Summary August 2015 1
Ryan Wiser & Mark Bolinger
Lawrence Berkeley National Laboratory
2014 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 2014 • 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 2
Available at: http://energy.gov/eere/wind
Report Contents • Installation trends • Industry trends • Technology trends • Performance trends • Cost trends • Wind power price trends • Policy & market drivers • Future outlook 3
Key Findings • Annual wind capacity additions rebounded in 2014, with significant additional new builds anticipated for 2015 and 2016 • Wind has been a significant source of new electric generation capacity additions in the U.S. in recent years • 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 projects is on the decline • Wind power sales prices have reached all-time lows, enabling economic competitiveness despite low natural gas prices • Growth after 2016 remains uncertain, dictated in part by future natural gas prices and policy decisions, though recent declines in the price of wind energy boost future growth prospects 4
Installation Trends
5
Wind Power Additions Rebounded in 2014, with 4,854 MW of New Capacity Added
• $8.3 billion invested in wind power project additions in 2014 • Wind build well off annual additions from 2007 through 2012 • Cumulative wind capacity up nearly 8%, bringing total to 65.9 GW 6
50%
80
40%
60
30%
40
20%
20
10%
0
s o A ty c p a C d in W
100
0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Wind Gas Wind (% of Total, right axis)
Solar Coal
Other Renewable Other Non-Renewable
2%
-2 ) 4 1 0
100% 80%
o (% fT lA ta d iy c p C u n ) s
n lA ta o T iy c p C u W (G s )d
Wind Power Represented 24% of ElectricGenerating Capacity Additions in 2014
54%
49%
Interior
Great Lakes
27%
26%
Northeast
West
33%
60%
7 0 s(2 n o d cityA p a C
i fG o g ta rcn e P
40% 20% 0% Wind
7
Solar
Other Renewable
Gas
Coal
Southeast
U.S. Total
Other Non-Renewable
From 2007-2014, wind comprised 33% of capacity additions nation-wide, and a much higher proportion in some regions
The U.S. Placed 3rd in Annual Wind Power Capacity Additions in 2014 Annual Capacity (2014, MW) China Germany United States Brazil India Canada United Kingdom Sweden France Turkey Rest of World TOTAL
23,300 5,119 4,854 2,783 2,315 1,871 1,467 1,050 1,042 804 6,625 51,230
Cumulative Capacity (end of 2014, MW) China 114,760 United States 65,877 Germany 39,223 India 22,904 Spain 22,665 United Kingdom 12,413 Canada 9,684 France 9,170 Italy 8,556 Brazil 6,652 Rest of World 60,208 TOTAL 372,112
Source: Navigant; AWEA project database for U.S. capacity
• Global wind additions reached a new high in 2014 • U.S. remains a distant second to China in cumulative capacity • U.S. led the world in wind energy production in 2014 8
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 2014 9
Geographic Spread of Wind Projects in the United States Is Reasonably Broad
Note: Numbers within states represent cumulative installed wind capacity and, in brackets, annual additions in 2014 10
Texas Installed the Most Capacity in 2014; 9 States Exceed 12% Wind Energy Percentage of In-State Generation
Installed Capacity (MW) Annual (2014) Texas 1,811 Oklahoma 648 Iowa 511 Michigan 368 Nebraska 277 Washington 267 Colorado 261 North Dakota 205 Indiana 201 California 107 Minnesota 48 Maryland 40 New Mexico 35 New York 26 Montana 20 South Dakota 20 Maine 9 Ohio 0.9 Massachusetts 0.6 Rest of U.S.
TOTAL
0
4,854
Cumulative (end of 2014) Texas 14,098 California 5,917 Iowa 5,688 Oklahoma 3,782 Illinois 3,568 Oregon 3,153 Washington 3,075 Minnesota 3,035 Kansas 2,967 Colorado 2,593 North Dakota 1,886 New York 1,748 Indiana 1,745 Michigan 1,531 Wyoming 1,410 Pennsylvania 1,340 Idaho 973 New Mexico 812 Nebraska 812 South Dakota 803 Rest of U.S. 4,941
Actual (2014)* Iowa 28.5% South Dakota 25.3% Kansas 21.7% Idaho 18.3% North Dakota 17.6% Oklahoma 16.9% Minnesota 15.9% Colorado 13.6% Oregon 12.7% Texas 9.0% Wyoming 8.9% Maine 8.3% New Mexico 7.0% California 7.0% Nebraska 6.9% Montana 6.5% Washington 6.3% Hawaii 5.9% Illinois 5.0% Vermont 4.4% Rest of U.S. 0.9%
TOTAL
TOTAL
65,877
* Based on 2014 wind and total generation by state from EIA’s Electric Power Monthly.
11
4.4%
• Texas has more than twice as much wind capacity as any other state • 23 states had >500 MW of capacity at end of 2014 (16 > 1 GW, 10 > 2 GW) • 2 states have >25% of total in-state generation from wind (9 states > 12%)
No Commercial Offshore Wind Turbines Commissioned; 1 Project in Construction and 18 in Various Stages of Development • 30 MW Block Island project (RI) started construction in 2015 • BOEM has granted 5 competitive leases; DOE funding 3 pilot deployments • Legal and political headwind for high-profile projects: • Cape Wind (MA) power purchase agreements cancelled by utilities • Fishermen’s Atlantic City (NJ) rejected by state PUC • Dominion (VA) announced delay due to cost
• Pressing challenges include cost, lack of PPAs and policy incentives, regulatory complexity 12
Interconnection Queues Demonstrate that a Substantial Amount of Wind Is Under Consideration Wind represented 30% of capacity in sampled 35 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 13.6 GW of capacity under construction after 1Q2015 13
Larger Amounts of Wind Planned for Texas, Midwest, Southwest Power Pool, PJM, and Northwest
14
Not all of this capacity will be built‌.
Industry Trends
15
GE, Siemens, and Vestas Captured 98% of the U.S. Market in 2014
W y th k a S U M E O e in rb u T
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
2014
• Recent dominance of the three-largest turbine suppliers in the U.S. market • Globally, Vestas remained the top supplier, followed by Siemens and GE • Chinese suppliers occupied 8 of the top 15 spots in the global ranking, based almost entirely on sales within their domestic market 16
Manufacturing Supply Chain Continued to Adjust to Swings in Domestic Demand Realignment Continued… • Uncertain medium-term demand and growing global competition led to 12 domestic manufacturing facility closures in 2014; only 1 new facility opened
Note: map not intended to be exhaustive 17
• Nonetheless, many supply chain manufacturers remain • Over last decade, manufacturers have localized and expanded U.S. presence • “Big 3” OEMs all still have at least one domestic facility • Wind related jobs increased from 50,500 in 2013 to 73,000 in 2014
Domestic Manufacturing Capability for Nacelle Assembly, Towers, and Blades Is Reasonably Well Balanced Against Demand Forecasts for 2015 and 2016
18
Turbine OEM Profitability Has Generally Rebounded Over the Last Two Years
19
Imports of Wind Equipment Are Sizable; Exports Continue to Grow Slowly 7
Exports of Wind-Powered Generating Sets
6
US Imports: Other wind-related equipment (est.) Wind generators (2012-2014) Wind blades and hubs (2012-2014) Towers (estimated through 2010)
5
Wind-powered generating sets
4
S U $ 4 1 0 2 n ilo B
3 2 1 0
U.S. is a net importer of wind equipment
2006 2457 MW
2007 5253 MW
2008 2009 2010 8362 MW 10005 MW 5216 MW
2011 2012 2013 6820 MW 13131 MW 1087 MW
2014 4854 MW
Exports of windpowered generating sets increased modestly in 2014 to $488 billion; no ability to track other windspecific exports, but total tower exports equalled $116 million
• Figure only includes tracked trade categories; misses other wind-related imports • See full report for the assumptions used to generate this figure 20
Tracked Wind Equipment Imports in 2014: 42% Asia, 39% Europe, 20% Americas
21
Note: Tracked wind-specific equipment includes: wind-powered generating sets, towers, hubs and blades, wind generators and parts.
Source Markets for Imports Vary Over Time, and By Type of Wind Equipment Wind-powered Generating Sets 90% China
80% 70% 60%
Denmark
50% 40% 30% 20%
ls) fau (% ie n rtC o p Im
• Majority of imports of wind-powered generating sets from home countries of OEMs, dominated by Europe and Asia • Majority of imports of towers from Asia, but decline in recent years after tariff measures largely stopped imports from China and Vietnam • Majority of imports of blades & hubs from Brazil and China in recent years • Globally diverse sourcing strategy for generators & parts, dominated by Asian and European countries
100%
Spain
10% 0% 2005 0.58B
Annual Imports
100%
2006 1.42B
2007 2.72B
2008 2.75B
2009 2.52B
2010 1.33B
2011 1.3B
2012 1.01B
Wind Blades & Hubs
Wind Towers
2013 0.02B
2014 0.25B
Wind Generators & Parts
Germany
90%
Spain
Spain
80%
Denmark
70%
Canada
60%
Mexico
50%
Indonesia
Denmark Serbia
China Spain
40% Japan
30% South Korea
20%
Brazil
10%
Vietnam
0% 2011 0.46B
22
2012 0.85B
2013 0.1B
2014 0.25B
2012 0.92B
2013 0.28B
2014 0.49B
2012 0.47B
2013 0.2B
2014 0.33B
Domestic Manufacturing Content Is Strong for Nacelle Assembly, Towers, and Blades, but U.S. Is Highly Reliant on Imports for Equipment Internal to the Nacelle Domestic Content for 2013 – 2014 Turbine Installations in the U.S. Generators
Towers
Blades & Hubs
Wind-Powered Generating Sets
< 15%
70-80%
45-65%
> 90% of nacelle assembly
Imports occur in untracked trade categories, including many nacelle internals
Overall estimated domestic content: ~40% in 2012 for wind turbine equipment; ~60% if considering total projects costs, including balance-of-plant 23
The Project Finance Environment Remained Strong in 2014 12% 10% 8%
Tax Equity Yield (after-tax) 15-Year Debt Interest Rate (pre-tax)
6% 4% 2%
15-Year Debt Interest Rate (after-tax)
0% Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15
• Project sponsors raised $5.8 billion of tax equity (largest single-year amount on record) and $2.7 billion of debt in 2014 • Tax equity yields held steady, while debt interest rates trended lower 24
y c p d s In e tiv la m u fC o %
Utility Ownership of Wind Rebounded Somewhat in 2014; IPPs Still Dominate 100%
100%
90%
90%
80%
80%
70%
70%
60%
60%
50%
50%
40%
Other
40%
30%
Publicly Owned Utility (POU)
30%
20%
Investor-Owned Utility (IOU)
20%
10%
Independent Power Producer (IPP)
10%
25
4 1 0 2
3 1 0 2
1 0 2
1 0 2
1 0 2
9 0 2
8 0 2
7 0 2
6 0 2
5 0 2
4 0 2
3 0 2
0 2
1 0 2
0 2
9 1
0%
8 9 1
0%
2014 Capacity by Owner Type
IPP: 3,572 MW (74%)
IOU: 1,281 MW (26%)
Other: 1 MW (0%)
Long-Term Contracted Sales to Utilities Remained the Most Common Off-Take Arrangement, but Merchant Projects Continued to Expand, at Least in Texas 100%
100%
90%
90%
80%
80%
70%
70%
60%
60%
50%
50%
40%
On-Site
40%
30%
Power Marketer
30%
Merchant/Quasi-Merchant
o % u m tifC la e v c p d s In y
20%
10% On-Site: 23 MW 0% (0.5%)
IOU
IOU: 2,497 MW (51%)
POU: 720 MW (15%)
4 1 0 2
3 1 0 2
1 0 2
1 0 2
1 0 2
9 0 2
8 0 2
7 0 2
6 0 2
5 0 2
4 0 2
3 0 2
0 2
1 0 2
0 2
9 1
0%
8 9 1
Merchant: 1,613 MW (33%)
20%
POU
10%
2014 Capacity by Off-Take Category
â&#x20AC;˘ Recently announced wind purchases of ~2 GW from technology companies and business giants to hospitals, universities, and government agencies 26
Technology Trends
27
Turbine Nameplate Capacity, Hub Height, and Rotor Diameter Have All Increased Significantly Over the Long Term
28
Growth in Rotor Diameter Has Outpaced Growth in Nameplate Capacity and Hub Height in Recent Years Nameplate Capacity Rotor Diameter
Hub Height
29
Turbines Originally Designed for Lower Wind Speed Sites Have Rapidly Gained Market Share Specific Power
Specific Power by IEC Class 2 & 3
IEC Class
30
Turbines Originally Designed for Lower Wind Speeds Are Now Regularly Used in Lower and Higher Wind Speed Sites, Whereas Taller Towers Predominate in the Great Lakes and Northeast By Region
31
By Wind Resource Quality
Performance Trends
32
le p Sam
1.20
35%
1.05
30%
0.90
25%
0.75
20%
0.60
15%
0.45
10% 5%
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)
0.30 0.15
0% 0.00 Year: 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 # Projects: 10 30 73 84 106 129 153 196 240 339 452 516 602 748 597 # MW: 591 943 2,682 3,128 4,500 5,142 7,967 9,951 14,926 23,617 33,381 38,562 44,751 58,299 58,685 Note: The wind resource index is compiled from NextEra Energy Resources reports 33
-Term cIx u so R d in W
40%
g n Lo
-W r ctyFo ap eC id
Sample-Wide Capacity Factors Have Increased, but Impacted by Curtailment and Inter-Year Wind Resource Variability
Wind Curtailment Has Generally Declined in Recent Years; Higher in MISO and New England than in Other Regions 18%
2007
16%
2008
2009
2010
2011
2012
2013
2014
Notes to figure: • BPA's 2014 curtailment estimate was unavailable at the time of publication. A portion of BPA’s curtailment from 2010-13 is estimated assuming that each curtailment event lasts for half of the maximum possible hour for each event. • SPP’s 2014 curtailment estimate is for March through December only. • PJM's 2012 curtailment estimate is for June through December only.
14% 12% 10%
f cgo esP rtalm u C d in W
r G d ialW ten o P
8% 6% 4% 2% 0%
ERCOT
MISO
BPA
NYISO
PJM
ISO-NE
SPP
In areas where curtailment has been particularly problematic in the past – principally in Texas – 34 steps taken to address the issue have born fruit
TOTAL SAMPLED
Except for BPA, data represent both forced and economic curtailment
Even Controlling for These Factors, Average Capacity Factors for Projects Built After 2005 Have Been Stagnant, Averaging 32% to 35% Nationwide 60%
Weighted Average (by project vintage) Individual Project (by project vintage)
50% 40% 30% 20%
) g n v je r(b Fo city p a C 4 1 0 2
10% Sample includes 591 projects totaling 58.5 GW
0% Vintage: 1998-99 2000-01 2002-03 2004-05 27 38 28 # projects: 25 1,760 1,988 3,652 # MW: 921 35
2006 20 1,708
2007 37 5,282
2008 79 8,498
2009 96 9,578
2010 48 4,733
2011 68 5,917
2012 117 13,533
2013 8 969
Trends Explained by Competing Influence of Lower Specific Power and Build-Out of Lower Quality Wind Resource Sites
Reversal of buildout in lower wind speed sites in 2013 and 2014: likely to show up in capacity factor data next year
All else equal: â&#x20AC;˘ Drop in average specific power will boost capacity factors â&#x20AC;˘ Building projects in lower wind resource sites will reduce capacity factors 36
Controlling for Wind Resource Quality and Specific Power Demonstrates Impact of Turbine Evolution 50% 45%
Sample includes 568 projects totaling 58.2 GW with a commercial operation date of 1998-2013
40% 35% 30% 25% 20% 15%
td igh e W
-A 4 1 0 2 rn ctyFo p C alizd e vg.R
10% 5% 0%
Specific Power â&#x2030;Ľ 400 (33 projects, 3.0 GW) Specific Power range of 300-400 (391 projects, 41.3 GW) Specific Power range of 220-300 (127 projects, 11.6 GW) Specific Power < 220 (17 projects, 2.2 GW) Lower Medium Higher Highest 174 projects, 12.5 GW 107 projects, 13.8 GW 138 projects, 17.0 GW 149 projects, 14.9 GW
Estimated Wind Resource Quality at Site
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 37
Controlling for Wind Resource Quality and Commercial Operation Date Demonstrates Impact of Turbine Evolution 50% 45% 40% 35% 30% 25% 20%
-A 4 1 0 2 rn ctyFo p C alizd e vg.R
15% 10% 5%
td igh e W
0%
Highest Wind Resource Quality Higher Wind Resource Quality Medium Wind Resource Quality Lower Wind Resource Quality 1998-992000-012002-032004-05 2006
2007 2008 2009 Project Vintage
2010
2011
2012
2013
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
Regional Variations in Capacity Factors Reflect the Strength of the Wind Resource and Adoption of New Turbine Technology 60% 50%
Weighted Average (by region) Weighted Average (total U.S.) Individual Project (by region)
40%
2014CapcityFor
30% 20% 10% 0%
39
Sample includes 124 projects built in 2012-13 and totaling 14.4 GW West 32 projects 3,938 MW
Northeast 15 projects 1,147 MW
Great Lakes 18 projects 2,109 MW
Interior 59 projects 7,253 MW
Cost Trends
40
Wind Turbine Prices Remained Well Below the Levels Seen Several Years Ago
Recent turbine orders reportedly in the range of $850-1,250/kW 41
Lower Turbine Prices Drive Reductions in Reported Installed Project Costs 6,000 5,000
Individual Project Cost (743 projects totaling 54,014 MW) Capacity-Weighted Average Project Cost
4,000 3,000
(2014$/kW jcC ro P staled In )
2,000 1,000
8291 9831 9841 9851 9861 9871 981 981 901 91 921 931 941 951 961 971 981 91 02 012 02 032 042 052 062 072 082 092 012 012 012 0132 0142
0 Commercial Operation Date
â&#x20AC;˘ 2014 projects had an average cost of $1,710/kW, down $580/kW since 2009 and 2010 (up slightly from small sample of 2013 projects) â&#x20AC;˘ Limited sample of under-construction projects slated for completion in 42 2015 suggest no material change in costs
Economies of Scale Evident, Especially at Lower End of Project & Turbine Size Range 3,500 3,000 2,500 2,000
Project Size
1,500
)In /kW $ 4 1 0 s(2 o tC rjc P d ale
1,000 500
Capacity-Weighted Average Project Cost Sample includes projects built in 2014
0 Project size: ≤5 MW 9 MW # MW: # projects: 6 projects
5-20 MW 87 MW 6 projects
20-50 MW 88 MW 2 projects
Individual Project Cost 50-100 MW 312 MW 4 projects
100-200 MW 1,713 MW 11 projects
>200 MW 1,680 MW 7 projects
3,500 Sample includes projects built in 2014
3,000 2,500 2,000
Turbine Size
1,500
)In /kW $ 4 1 0 s(2 jctC ro P d le a
1,000
43
500 0 Turbine size: # MW: # projects:
Capacity-Weighted Average Project Cost Individual Project Cost >0.1 & <1 MW 1 MW 2 projects
≥1 & <2 MW 2,237 MW 22 projects
≥2 & <3 MW 1,445 MW 11 projects
≥3 MW 205 MW 1 project
Regional Differences in Average Wind Power Project Costs Are Apparent, but Sample Size Is Limited 3,500 Sample includes projects built in 2014 3,000 2,500 2,000 1,500
) W /k $ 4 1 0 (2 jcC ro P d le sta In
1,000
0
44
Capacity-Weighted Average Project Cost Individual Project Cost Capacity-Weighted Average Cost, Total U.S.
500
Interior 22 projects 2,961 MW
West 5 projects 274 MW
Northeast 2 projects 95 MW
Great Lakes 6 projects 519 MW
Southeast 1 project 40 MW
Different permitting/development costs may play a role at both ends of spectrum: itâ&#x20AC;&#x2122;s easier/cheaper to build in the US interior and harder/more expensive along the coasts
-2014
Operations and Maintenance Costs Varied By Project Age and Commercial Operations Date 90
Projects with no 2014 O&M data
80
Projects with 2014 O&M data
70 60 50
) h W (2014$/M
40 30 20
0
9821 1983 1984 1985 1986 1987 198 198 190 19 192 193 194 195 196 197 198 19 20 201 20 203 204 205 206 207 208 209 201 201 201
st20A o C M & lO u veragn
10
Commercial Operation Date
Capacity-weighted average 2000-14 O&M costs for projects built in the 1980s equal $34/MWh, dropping to $24/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 147 wind projects totaling 10,350 MW; few projects in sample have complete records of O&M costs from 2000-14; O&M costs reported here DO NOT include all operating costs 45
Operations and Maintenance Costs Varied By Project Age and Commercial Operations Date 40 35
Commercial Operation Date: 1998-2004 2005-2008
30
2009-2013 25 20 15 10
1
2
3
4
5
6
7
8
9
10
11
12
13
14
4 = n
4 = n
5 = n
5 = n
5 = n
6 = n
n 6 = 2 = n
5 = n n 6 =
n 4 = 1 = n
0
8 1 = n n 3 2 = 9 2 = n 1 3 = n 5 2 = n 9 2 = n 3 2 = n 5 2 = n 7 1 = n 1 2 = n 5 2 = n 3 1 = n 9 = n 5 2 = n 9 = n 6 = n 5 2 = n
) h /W $ 4 1 0 t(2 s o C & lO u A n ia d e M
5 15
Note: Sample size is limited
Project Age (Number of Years Since Commercial Operation Date)
O&M reported in figure does not include all operating costs: Statements from public companies with large U.S. wind asset bases report total 46 operating costs in 2014 for projects built in the 2000s of ~$21-25/MWh
Wind Power Price Trends
47
Sample of Wind Power Prices • Berkeley Lab collects data on historical wind power sales prices, and long-term PPA prices • PPA sample includes 363 contracts totaling 32,641 MW from projects built from 1998-2014, or planned for installation in 2015 or 2016 • 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 48
Wind PPA Prices Have Reached All-Time Lows, Dominated by Interior Region Interior (20,611 MW, 212 contracts) West (7,124 MW, 72 contracts) Great Lakes (3,620 MW, 48 contracts) Northeast (1,018 MW, 25 contracts) Southeast (268 MW, 6 contracts)
$120 $100 $80
150 MW
50 MW
$60 $40 75 MW
PPA Execution Date 49
-15 Jan
-14 Jan
-13 Jan
-12 Jan
-1 Jan
-10 Jan
-09 Jan
-08 Jan
-07 Jan
-06 Jan
-05 Jan
-04 Jan
-03 Jan
-02 Jan
-01 Jan
-0 Jan
-9 Jan
-98 Jan
-97 Jan
$0 -96 Jan
LevlizA )P h W 014$/M rc(2d
$20
A Smoother Look at the Time Trend Shows Steep Decline in Pricing Since 2009; Especially Low Pricing in Interior Region $100 $90 $80 $70 $60 $50 $40 $30
) h W /M $ 4 1 0 2 c(R P gLlizd ra ve A
$20 $10
$0 PPA Year: 1996-99 2000-01 2002-03 2004-05 2006 10 17 24 30 30 Contracts: 1,249 1,382 2,190 2,311 MW: 553 50
Nationwide
Interior
Great Lakes
West
Northeast 2007 26 1,781
2008 39 3,465
2009 49 4,048
2010 48 4,642
2011 42 4,572
2012 14 985
2013 26 3,674
2014 13 1,768
Relative Competitiveness of Wind Power Improved in 2014: Comparison to Wholesale Electricity Prices 100
Wind project sample includes projects with PPAs signed from 2003-2014
90 80 70 60
h W 2014$/M
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 51
2004 13 547
2005 2006 2007 2008 2009 2010 2011 17 30 26 39 49 48 42 1,643 2,311 1,781 3,465 4,048 4,642 4,572
2012 14 985
2013 2014 26 13 3,674 1,768
• Wholesale price range reflects flat block of power across 23 pricing nodes across the U.S. • Price comparison shown here is far from perfect – see full report for caveats
Comparison Between Wholesale Prices and Wind PPA Prices Varies by Region 100
Average 2014 Wholesale Power Price Range
90
Individual Project Levelized Wind PPA Price
80
Generation-Weighted Average Levelized Wind PPA Price
70 60
h W 2014$/M
50 40 30 20 10 0
Wind project sample includes projects with PPAs signed in 2012-2014 Interior 37 projects 5,275 MW
Great Lakes 10 projects 755 MW
Northeast 1 project 69 MW
West 5 projects 329 MW
Total US 53 projects 6,427 MW
Wind PPA prices most competitive with wholesale prices in the Interior region 52
Notes: Wind PPAs included are those signed from 20122014. Within a region there are a range of wholesale prices because multiple price hubs exist in each area; price comparison shown here is far from perfect â&#x20AC;&#x201C; see full report for caveats
Recent Wind Prices Are Hard to Beat: Competitive with Expected Future Cost of Burning Fuel in Natural Gas Plants 100
Range of AEO15 gas price projections AEO15 reference case gas price projection Wind 2012 PPA execution (985 MW, 14 contracts) Wind 2013 PPA execution (3,674 MW, 26 contracts) Wind 2014 PPA execution (1,768 MW, 13 contracts)
90 80 70 60 50 h W 2014$/M
40 30 20 10
204
2039
2038
2037
2036
2035
2034
203
203
2031
203
209
208
207
206
205
204
203
20
201
20
2019
2018
2017
2016
2015
0
Price comparison shown here is far from perfect â&#x20AC;&#x201C; see full report for caveats 53
Renewable Energy Certificate (REC) Prices Remain High in Northeast, While Rising Modestly among Mid-Atlantic States New England Class I
Mid-Atlantic Tier I, Texas, & Voluntary Mkt
$80
$40 CT
MA
ME
NH
DC MD OH (O-S) Vol. (natn'l)
RI
$30
$40
$20
$20
$10
$0
$0
IL (wind) OH (I-S) TX
REC prices vary by: market type (compliance vs. voluntary); geographic region; specific design of state RPS policies 54
5 1 0 2
4 1 0 2
3 1 0 2
1 0 2
1 0 2
1 0 2
5 1 0 2
4 1 0 2
3 1 0 2
1 0 2
1 0 2
1 0 2
h W /M $ 4 1 0 2
$60
DE NJ PA Vol. (west)
Policy and Market Drivers
55
Availability of Federal Incentives for Wind Projects Built in the Near Term Has Is Leading to a Resurgent Domestic Market, but a Possible Policy Cliff Awaits • Near-term availability of the PTC/ITC for those projects that reached the “under construction” milestone by the end of 2014 will enable solid growth in 2015 and 2016; uncertain prospects after that • Prospective impacts of more-stringent EPA environmental regulations, including those related to power-sector carbon emissions, may create new markets for wind energy
56
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 OR: 25% by 2025 (large utilities) 5-10% by 2025 (smaller utilities)
CA: 33% by 2020
MT: 15% by 2015
NV: 25% by 2025
MN: 26.5% by 2025 Xcel: 31.5% by 2020 WI: 10% by 2015
NY: 30% by 2015 PA: 8.5% by 2020 MI: 10% by 2015 OH: 12.5% by 2026
IA: 105 MW by 1999 IL: 25% by 2025 MO: 15% by 2021 CO: 30% by 2020 (IOUs) 20% by 2020 (co-ops) 10% by 2020 (munis)
AZ: 15% by 2025 NM: 20% by 2020 (IOUs) 10% by 2020 (co-ops) TX: 5,880 MW by 2015 HI: 100% by 2045 Source: Berkeley Lab
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ME: 40% by 2017 NH: 24.8% by 2025 VT: 75% by 2032 MA: 11.1% by 2009 +1%/yr RI: 16% by 2019 CT: 23% by 2020 DE: 25% by 2025 NJ: 22.5% by 2020 DC: 20% by 2020 MD: 20% by 2022 NC: 12.5% by 2021 (IOUs), 10% by 2018 (co-ops and munis)
• 29 states and D.C. have mandatory RPS programs • State RPS’ can support ~4-5 GW/yr of renewable energy additions on average through 2025 (less for wind specifically)
Solid Progress on Overcoming Transmission Barriers Continued • Over 2,000 circuit miles of new transmission built in 2014; lower than 2013 but consistent with 2009-2012 • 22,000 additional circuit miles proposed by March 2017, with half having a high probability of completion • AWEA has identified 18 near-term transmission projects that – if all were completed – could carry 55-60 GW of additional wind power capacity
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• 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
System Operators Are Implementing Methods to Accommodate Increased Penetrations of Wind $20 $18
$14 $12 $10
W /M s($ C n io ra g )te I h
Integrating wind energy into power systems is manageable, but not free of additional costs
$16
$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) PacifCorp (2014) 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. 59
Future Outlook
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Sizable Wind Additions Anticipated for 2015 & 2016; Downturn and Increased Uncertainty in 2017 and Beyond
Wind additions in 2014 and anticipated additions from 2017-2020 fall below the deployment trajectory analyzed in DOEâ&#x20AC;&#x2122;s Wind Vision report 61
Current Low Prices for Wind, 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 62
Conclusions • Annual wind capacity additions rebounded in 2014, with significant additional new builds anticipated for 2015 and 2016 • Wind has been a significant source of new electric generation capacity additions in the U.S. in recent years • 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 projects is on the decline • Wind power sales prices have reached all-time lows, enabling economic competitiveness despite low natural gas prices • Growth after 2016 remains uncertain, dictated in part by future natural gas prices and policy decisions, though recent declines in the price of wind energy boost future growth prospects 63
For More Information... See full report for additional findings, a discussion of the sources of data used, etc. • http://energy.gov/eere/wind
To contact the primary authors • Ryan Wiser, Lawrence Berkeley National Laboratory 5474, RHWiser@lbl.gov
510-486-
• Mark Bolinger, Lawrence Berkeley National Laboratory 4937, MABolinger@lbl.gov
603-795-
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. 64