Energize Weekly, April 29, 2020
Wind power led in electricity generation installations in 2019, and this year is showing signs of becoming a bigger source of energy, according to several studies.
Still, uncertainty about the economy and supply chains as a result of the COVID-19 pandemic is making the sector’s future uncertain.
In 2019, the electric power sector installed 23 gigawatts (GW) of new capacity with onshore wind leading the way with 9.1 GW, followed by natural gas-fired with 8.3 GW of new capacity and solar photovoltaic with 5.3 GW, according to the U.S. Energy Information Administration (EIA).
While total electricity consumption in the U.S. has remained flat since the mid-2000s, new electricity generation installations have continued to increase in the last decade, in part to replace retiring coal-fired plants, the EIA said.
“Low natural gas prices, a rapid decline in construction costs for solar and wind systems, and an increase in renewable portfolio energy standard requirements in many states have led to more generation from natural gas-fired and renewable resources in many regions,” the EIA said.
The 9.1 GW of new wind generation represented a $14 billion investment in 55 projects in 19 states, according to the American Wind Energy Association (AWEA), an industry trade group.
The 2019 additions – almost 40 percent of all new generating capacity for the year – boosted total U.S. wind generation capacity to 105 GW from 66,000 turbines, AWEA said.
The growing wind power capacity has taken over a growing share of generation in 2020, as electricity demand has dropped across the country as much of the nation’s economy shut down due to the pandemic.
As demand has dropped, utilities have tried to maximize their least costly generation, such as wind and solar, which have lower operating costs and no fuel costs.
Meanwhile, coal-fired generation provided 16.4 percent of the nation’s electricity in March, down from 22.5 percent for the same month in 2019, according to the Rhodium Group. Wind and solar were up 14 percent and accounted for 12.2 percent of electricity generation.
For the first quarter of 2020, wind, solar and hydro outperformed coal, according to a report from the clean energy-oriented Institute for Energy Economics and Financial Analysis.
In March, wind power outperformed coal all by itself on three days, according to EIA data. For example, on March 8, wind installations generated 1.4 million megawatt-hours compared to 1.3 million megawatt-hours for coal-fired plants.
Six states – Iowa, Kansas, Maine, North Dakota, Oklahoma and South Dakota – routinely generated at least 20 percent of their electricity using wind. Iowa and Kansas get 40 percent of their electricity from wind turbines.
The pandemic, however, has clouded wind’s future. AWEA said its analysis shows an estimated 25 GW of wind projects are at risk due to COVID-19, representing $43 billion in investment.
The supply chain for developers is also uncertain. TPI Composites Inc. announced April 24 it was suspending production at its composite wind turbine blade manufacturing plant in Newton, Iowa, to implement more COVID-19 testing and suspended its 2020 financial guidance.
Twenty-eight workers at the Newton facility had tested positive for the virus.
Turbine maker Siemens Gamesa Renewable Engine withdrew its financial guidance for 2020 saying it was having supply chain problems. Danish turbine manufacturer Vestas also suspended guidance and laid off 400 workers, primarily at its plants in Denmark.
On April 20, LM Wind Power closed its manufacturing plant in Grand Forks, N.D., following an outbreak of COVID-19 infections.
AWEA and wind project developers have been pushing – so far unsuccessfully – for Congress to extend the federal production tax credit (PTC) set to expire at the end of the year.
The PTC, which is worth about $24 for each megawatt-hour a project generates in its first 10 years, has been a key financial tool for developers. To receive the full PTC, projects must be completed, or have expended 5 percent of project funds, by the end of the year.