Wind’s growth has been so rapid and its price has dropped so fast that a more important long term trend is often missed: It is quickly expanding its addressable marketplace.
Deployed wind energy capacity grew almost 19% in 2016, to 5.53% of total U.S. generating capacity, according to the U.S. Energy Information Administration (EIA). By year’s end, it was the nation’s most plentiful renewable resource by capacity, surpassing hydropower. There is now wind generation in 41 states. In the fourth quarter alone, 19 states brought new projects online.
Momentum for that wind construction came not just from utilities aiming to meet renewable energy mandates, but because power companies saw economic reasons to invest in wind.
“It is a buyer’s market for utilities in wind right now,” said Tammie McGee, spokesperson at Duke Energy Renewables, a wind and solar developer. “They can still get 80% of the production tax credit [PTC] benefit before it is stepped down to 60% at the end of this year. And power purchase agreement [PPA] prices are now in many places competitive with fossil fuel generation, so it is a cost-effective way to diversify an energy portfolio.”
Total investments in U.S. wind deployments hit $13.8 billion last year, according to Hannah Hunt, senior analyst at the American Energy Wind Association (AWEA), the wind trade group. They came from a “diverse geography of investor-owned utilities, public power utilities, electric cooperatives, and private sector off-takers,” she added.
Utilities and cooperatives, according to Hunt, took 56% of the new capacity contracted for in 2016. That was up from 50% in 2015 and 40% in 2014. Non-utility off-takers, meanwhile, accounted for 39% of new PPA capacity last year, while the remaining 11% of capacity was merchant wind generation.
Regulated and unregulated utilities also played an important role in project development and operation in 2016, Hunt said holding at least partial ownership in an estimated 50% of the projects that went into service last year.
That trend is expected to continue into 2017, with utilities of all types expanding their investments in wind energy through PPAs or direct ownership. Meanwhile, the steady decline in PPA prices is allowing utilities in new regions of the U.S. take advantage of the wind boom. Transmission capacity, however, remains a major constraint.
In the fourth quarter of 2016 alone, the U.S. wind industry added 6,478 MW, bringing the 2016 installed capacity to 8,203 MW. In the U.S. alone, installed capacity topped 82,000 MW, according to AWEA’s U.S. Wind Industry Fourth Quarter 2016 Market Report.