U.S. wind investment hits $13 billion in 2019, generating capacity grows across the country

Energize Weekly, September 2, 2020

More than nine gigawatts (GW) of wind generating capacity – a $13 billion investment – was installed in the U.S. in 2019 as wind power output rose to 7 percent of the nation’s total electricity supply, according to a market report by the Lawrence Berkeley National Laboratory.

Renewable energy investment globally – led by a huge jump in offshore wind – had a strong start in 2020, Bloomberg New Energy Finance (BNEF) said, based on its database of deals and projects, although overall the U.S. was lagging.

The Berkeley report found across-the-board improvements in generating capacity, costs and prices for wind turbines.

The capacity factor – the amount of potential turbine generation utilized in producing electricity – was 41 percent for wind farms built between 2014 and 2018 compared with 31 percent for projects built between 2004 and 2012.

“Improved plant performance has been driven, in part, by larger turbines mounted on taller towers and featuring longer blades,” the report said. “The area swept by the average wind turbine rotor has more than doubled since 2010, compared to a 42 percent increase in average turbine capacity and a 13 percent increase in average hub height.”

The nationwide average installed cost of wind projects in 2019 was $1,440 a kilowatt (kW), a 40 percent drop since 2010, and the levelized cost of energy (the cost of building and operating a project over its lifetime divided by the electricity it produces) was in the mid-$30 a megawatt-hour (MWh) range in 2019 compared with $85 to $90 a MWh 10 years ago.

The average cost of electricity provided in contracts called power purchase agreements (PPAs) dropped below 2 cents a kilowatt-hour (kWh), down from 7 cents a kWh in 2009.

The study noted that the PPA average was dominated by projects in the midcontinent wind corridor, which has the country’s best wind resources.

The market value of wind in 2019 was lowest in the Southwest Power Pool, which serves the central U.S. and the Electric Reliability Council of Texas (ERCOT). The Southwest Power Pool averages 1.5 cents a kWh and ERCOT 1.6 cents a kWh.

“This sub-2¢/kWh average, which is possible in part due to federal tax support, falls below the projected future fuel costs of gas-fired generation,” the report said. “Utility-scale solar PPA prices have also declined precipitously, pressuring wind’s competitive position.”

Wind generation now supplies more than 10 percent of the electricity in 14 states and 40 percent in two states – Iowa and Kansas.

Globally, offshore wind was off to a blazing start in 2020 with $35 billion in project financing, up 319 percent year-on-year. The first half figure also eclipsed the total for 2019, $31.9 billion, according to BNEF.

There were investments in 28 offshore wind farms, including the largest ever built, a 1.5-GW project in the Netherlands. China accounted for 17 projects.

“Offshore wind is benefitting from the 67 percent reduction in levelized costs achieved since 2012, and to the performance of the latest, giant turbines,” Tom Harries, head of BNEF wind analysis, said in a statement. “But the first half of this year also owed a lot to a rush in China to finance and build, in order to take advantage of a feed-in tariff before it expires at the end of 2021.”

Overall investment in new renewable energy capacity (not counting large hydroelectric dams) was $132.4 billion in the first half of 2020, up 5 percent from a revised $125.8 billion in the same period of 2019, BNEF said.

China remained the largest market with $41.6 billion in investments in the first half of 2020, a 42 percent increase over the same period in 2019. European investment reached $36.5 billion, up 50 percent, while the U.S. slipped 30 percent to $17.8 billion in total renewable energy investment.

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