Onshore and offshore U.S. wind development made big gains in 2021, DOE says
Energize Weekly, August 31, 2022
Wind generation posted strong performances – both onshore and offshore – in 2021, according to U.S. Department of Energy (DOE) market reports.
Land-based wind generation grew by 13.4 gigawatts (GW) in 2021 reflecting $20 billion in new investment, bringing total onshore wind capacity in the U.S. to nearly 136 GW.
The onshore growth, according to the DOE report prepared by the Lawrence Berkeley National Laboratory, was “largely attributed to a significant improvement in the cost and performance of wind power technologies, along with supportive federal and state-level policies.”
A record 247 GW of wind power capacity is in transmission interconnection queues waiting to be linked to the grid.
Offshore, falling wind prices, state-level commitments and an “unprecedented expansion” into new leasing areas enabled the wind pipeline to grow 13.5 percent over the previous year, according to a second market report.
There are now 40 GW of offshore wind projects in various stages of development, according to the report prepared for DOE’s Wind Industry Technologies Office by the National Renewable Energy Laboratory (NREL).
The pipeline includes two projects in operation totaling 42 megawatts (MW), two projects under construction totaling 932 MW and 18 projects in the permitting phase totaling 18,581 MW.
“This expansion in the U.S. project pipeline was driven by the Bureau of Ocean Energy Management’s (BOEM’s) ‘Offshore Wind Leasing Path Forward 2021‒2025,’ which auctioned eight new lease areas in the Atlantic and converted two California Call Areas into a new wind energy area,” according to the NREL market report.
Land-based wind power capacity additions accounted for 28 percent of all new capacity in 2021, the second largest source after solar generation’s 40 percent share.
Texas installed the most wind capacity in 2021 – 3,343 MW – followed by Oklahoma, New Mexico and Kansas. Eleven states exceeded 20 percent wind energy penetration.
The economics on land-based wind have been steadily improving with turbine prices declining over the last decade to an average $800 to $950 per kilowatt (kW) in 2021.
The average installed cost of wind projects in 2021 was $1,500 a kW, down more than 40 percent since the peak in 2010.
However, supply chain pressures in 2021 led to a 5 percent to 10 percent increase in turbine prices. “Recent supply chain pressures and rising commodity prices led to increased turbine prices in 2021,” the Berkeley market report said
Domestic manufacturing content is strong, accounting for 85 percent of nacelle assembly and 55 percent to 70 percent for towers. For blades, however, only 15 percent 25 percent was domestic content in 2021. As a result, the U.S. wind industry remains reliant on imports, which totaled $3.1 billion in 2021 with Mexico, Spain and India the major exporters.
The average levelized cost of onshore wind energy — a measure of the cost of building and operating an installation through its lifetime – without subsidies has fallen to around $32 a megawatt-hour (MWh). The average power purchase agreement for delivery of electricity was $20 MWh in 2021.
The estimated levelized cost of energy for commercial-scale offshore wind projects declined 13 percent to $84 MWh on average.
The surge in offshore projects is being spurred by both federal and state policies. In addition to federal programs promoting offshore wind, states policies have set procurement targets.
“The U.S. offshore wind energy market continues to be driven by state-level offshore wind procurement activities and policies. In aggregate, offshore wind policies in eight states call for deploying at least 39,322 MW of offshore wind capacity by 2040,” the NREL market report said.
Offshore wind manufacturing is perhaps even more vulnerable to supply chain issues than land-based wind development. “Macroeconomic and geopolitical events have raised the level of market uncertainty in 2022,” the market NREL report said. “The extended impact of monetary policy, the COVID-19 pandemic, and the ongoing conflict in Ukraine have created macroeconomic volatility, supply chain disruptions, and inflationary pressures.”